Cold Weather, Hot Cattle, and Fading Grain Rallies: What the Markets Are Really Telling Us

After an overnight rally to new 2-week highs in corn, 6-week highs in wheat, and 3-week highs in beans, markets faded through the morning trade to finish lower. Wheat had been driven by the bitterly cold Plains weather this week while technical momentum and strong exports helped corn and beans, before all three hit overhead technical resistance which brought in fund and farmer selling. With wetter forecasts for Argentina starting mid-week and no flash export sales announcements, there was no bullish news to help push through resistance. The mix of news this week will be the arctic cold that has settled over most of the country and if another government shutdown can be averted by Saturday’s January 31^stdeadline.

News and Notes:

• The weekend forecasts have welcome rain returning to Argentina and S Brazill early next week which will help offset the recent dry/hot stress. Crop estimates continue to increase with AgRural raising Brazil’s bean crop to 6.64 BBU with corn up slightly to 5.38 BBU. Both estimates from AgRural and ABARES are above the January USDA estimates. Early bean yields in Brazil point toward the upper end of public and private yield estimates are still in play. That could be another 150-180 MBU of beans to deal with in the months ahead.
• The daily December corn chart is on Page 2 and shows a couple key things. The first is that prices have moved back into the lower end of the long-standing pre-report range from $4.51 to $4.70. Today’s failed attempt to punch back over the 20-DMA makes sense, but it is not as important as the market finding enough buyers to push prices up. Strong exports and the need for the US to plant 94 MA of corn this spring, prices should find a new range, until more is known about US planting intentions.
• Cattle rallied again today on concerns from the brutal cold over the next week and the potential death loss during early calving. Friday’s Cattle on Feed report was within expectations, but another lower annual placement rate will keep prices supported on breaks, unless the Mexican border is re-opened, which does not look imminent.
• With the exclusion of year-round E-15 dropped from the emergency funding bill and assigned for committee review, ethanol will not be a part of any big expansion in 2026. The EPA appears to have finished their review for the 45Z bio-fuel standards with an announcement expected in February. One potential positive surprise for bio-fuel is President Trump going to Iowa on Tuesday. With sagging poll ratings and mid-term election concerns, President Trump needs to excite his rural base and announcing new higher demand guidelines would be a good start.
• The US Dollar fell to new 4-month lows as the world moves from US Dollar ownership to gold, silver, and other metals. With the US debt approaching $40 trillion and President Trump’s love of creating international political and trade tension, the world banking system is losing faith in the US Dollar as the world’s reserve currency, with gold trying to reclaim its world financial status.
• If the US government does shut down later this week, steps were taken over the last week with recent bills fully funding the USDA and EPA. This will keep the weekly and monthly reports up to date.

President Trump’s speech tomorrow in Iowa will be closely watched for any details that could help increase bean and corn used for renewable fuels. The trade will not be expecting any major breakthroughs, but Trump’s love of off-the-cuff comments could give the industry some insight as to future policy direction. With China’s bean purchases complete and Brazil’s harvest underway, bean news will have  a hard time being bullish in the weeks ahead. It will be too early to gauge potential wheat winter kill totals late this week, but sub-zero temperatures and high winds certainly cut stand potential. Corn has the most supportive outlook as demand stays strong and prices need to rally to motivate US producers to not switch to lower cost beans this spring.