Corn and soybean futures ended Tuesday higher, while wheat saw mixed results. In the livestock sector, both cattle and hogs finished the session lower.
Soybeans Rally on China Demand, Despite a Record Brazilian Crop
Soybeans rallied on Tuesday despite USDA leaving U.S. ending stocks at 350 million bu. in the February WASDE report and raising the Brazilian soybean crop by 2 MMT to a record 180 MMT.
Dan Basse of Ag Resource Company says traders are currently looking past USDA’s figures to focus on two primary demand catalysts:
- China Demand: Market participants are optimistic following recent discussions regarding China potentially purchasing an additional 8 million tons of U.S. soybeans.
- Policy Shifts: Anticipation is building for the EPA’s Renewable Volume Obligations (RVOs) and 45Z tax credit updates expected in March.
Will China Actually Buy 8 MMT of U.S. Soybeans?
The big question is why would China buy another 8 MMT of old crop soybeans from the U.S. when Brazil is harvesting a record crop and offering prices that are nearly $1 under U.S. prices?
Basse notes China’s buys are tactical. He estimates that China may only fulfill 2 to 5 million tons of the requested 8 million. Furthermore, Brazil’s crop continues to look massive, with Ag Resource estimating production between 184 and 186 million metric tons — significantly higher than previous projections.
WASDE Cuts Corn Ending Stocks 100 Million Bushels
Corn futures ended steady to a penny higher on Tuesday but saw a muted response to USDA lowering corn ending stocks in the February WASDE by 100 million bushels. The agency made the cut with a subsequent increase in exports to a record 3.3 billion bu.
“We believe the corn export pace justified the increase,” Basse says. “Where I was surprised is that it happened in February and not in March. USDA has a history of waiting until March to make these kind of adjustments. They did it proactively, so kudos to them on that. But again, we still have 2 billion bushels of U.S. corn in the market.”
U.S. corn ending stocks are still burdensome and he explains that’s why the corn market barely budged on Tuesday. Basse says that will continue to keep corn range bound between $4.15 and $4.40. Plus, the U.S. corn export program may be about to slow down. “For the first time since July, Brazil and Argentina are offering corn at lower prices than the U.S., which may slow seasonal exports,” he explains.
Can Anything Rally the Corn Market?
Basse says with exports already at record levels it will take a weather problem in South America or the U.S. to break corn out of it’s trading range. Even lower acreage may not be enough as Ag Resource is projecting a shift of up to 6 to 7 million acres from corn to soybeans due to lower production costs.
Wheat Sees Increased U.S. Ending Stocks
USDA raised U.S. wheat ending stocks in the February WASDE by 5 million bu. to 931 million bu. And while the agency lower world carryout by .8 MMT, global supplies continue anchor the market. Basse says Russian exports remain aggressive despite currency fluctuations and weather challenges.
Cotton Sees Increased Ending Stocks otton Sees Increased Ending Stocks
Similarly, cotton remains oversupplied, and USDA raised U.S. ending stocks by 200,000 bales to 4.4 million bales in the report. Basse says the cotton market can’t seem to catch a break and with continued low prices he is expecting lower acres again in 2026.
Acreage Shifts
Basse says those cotton acres could shift over to row crops. “And there’s some people like me that worry the overall pie for the corn and soybean market may be 182 or 183 million acres versus 180 last year,” he says.
If soybeans rally over $11.50 though he doesn’t think the corn market will need to move higher to catch up and protect acres. “I think corn can stay where it’s at, but I do think you’re going to see more bean acreage, maybe 86.5 or 87 million acres. That’s up 6 or 7 million acres from last year. Farmers like rotation.”
“Beans are cheaper to produce. If spring weather is favorable, farmers are now planting beans earlier. I think they could really run at the bean market. We see a big jump in acreage there that would take corn down to 93 or 93.5. That’s helpful to corn,” he adds.
If that shift happens he think corn ending stocks will finally fall ending 2 billion bu. but soybeans carryout balloons to between 450 to 500 million bu.
“The message to producers is if you get beans up to $11.20 or $11.50, you need to be selling some beans for next year just to prepare, sell and defend,” Basse says.
