Grain Markets End Higher While Livestock Prices Drop

Grain markets saw an upswing on Wednesday, led by gains in soybeans and wheat, although cattle and hog prices fell.

Grain Market Rally Driven by Corrective Buying

The increase in grain prices can mainly be attributed to soybeans and wheat. Garrett Toye from AgTraderTalk suggests this rally follows a decline that persisted until the end of 2025, along with some corrective buying after soybeans dropped $1.40 from their highs. “We’re back near where we were around Christmas Eve. That week was tough but not too much volume, which allowed the market to be pushed around a bit. Now it’s like a reversion to the mean, and it’s stabilizing. We are at the lower end of the range, and while demand for corn remains strong, we’re still fluctuating within this range for now,” he mentioned.

Challenges Ahead for Extending the Rally

March corn and soybeans approached their 200-day moving averages but fell short of closing above that mark. Toye expressed concern about the market’s ability to maintain momentum, especially with the January WASDE and crop production reports looming. “I doubt the market will feel confident around those averages, particularly with the report coming Monday. Beans might see a bit more traction because the pipeline looks tight, but there isn’t much enthusiasm about corn. The market is aware of where farmers plan to sell their corn, which poses a challenge for beans,” he explained.

Demand Influences Soybean Prices

There’s notable end-user buying in soybean futures, primarily spurred by purchases from China. This week, speculation suggested that China might buy 10 cargoes, or about 600,000 tonnes of soybeans. However, soybean processors are under pressure, as many farmers typically sell their soybeans right after harvest, leaving processors needing to refill their supplies. “It’ll be interesting to see how much bid processors will offer to entice farmers to release their stored soybeans,” Toye noted.

China’s Soybean Purchases Nearing Completion?

This week, rumors emerged about Sinograin’s plans to acquire an additional 10 to 14 cargoes for delivery between March and May. Some analysts suggest that China has secured approximately 10 million metric tons of its promised total of 12 million. Toye anticipates this flurry of purchasing will soon plateau as Brazil’s harvest is set to occur in the next 45 days. “Given that prices in Brazil are lower, it’s likely that China will pivot to South American crops soon,” he added.

South American Weather Outlook

The weather forecast indicates generally favorable conditions in Brazil, although parts of Argentina are facing new dry spells. Still, private estimates for Brazil’s soybean harvest have been consistently rising, with StoneX now projecting production at 177.6 million metric tons. “Brazil’s ANEC indicated that soybean exports in 2026 are expected to drop by about 10 million tonnes compared to last year, which aligns with what Sinograin is currently looking to acquire outside the U.S.,” he said.

Corn Market Held Back by WASDE Reports

Corn remains in a holding pattern as traders await final crop production data from the upcoming WASDE report on January 12. Toye noted that current basis levels don’t hint at major shifts in stock levels. “I don’t expect any significant reduction in yield that would excite the market. Considering we have feed residue numbers that are significantly higher than last year, there’s demand that could potentially counterbalance any production reductions,” he mentioned.

Edging Between Buyer and Seller

Corn prices are caught in a narrow trading range between $4.35 and $4.45, with end-user buying keeping prices steady on the lower end while farmers are selling at the higher side. “I doubt a significant narrative will change that dynamic. My concern is that while beans are showing some strength, crops will shift, and some acres may revert to beans. I was considering around 4 million acres shifting, but even then, we’ll still have around 95 million acres dedicated to corn, which remains substantial,” he articulated.

Wheat Futures Under Pressure

Wheat futures are experiencing corrective buying and short covering, with a notable short position of over 130,000 contracts. After hitting new lows last Friday, it seems the market isn’t keen on remaining short below $5, especially given ongoing geopolitical concerns.

Fund Rebalancing Slated for the New Year?

Some advisory firms are speculating about grain purchases tied to fund rebalancing as the new year begins. However, Toye remains skeptical, suggesting that any advantages in corn are spread out over several days and are rather mechanical, hence unlikely to move the market significantly.

Profit-Taking Affects Cattle Markets

Profit-taking was evident in both live and feed cattle futures on Wednesday. Toye pointed out that the February live cattle contract hit resistance around $237.45 on Monday and Tuesday, leading to a technical selloff. “It’s a bit surprising how the market is waiting for spot trading for guidance,” he remarked.

Hogs Follow Suit with Lower Prices

Lean hog futures also dipped due to profit-taking and market consolidation reflective of the cattle market. Although cash trades have increased by $10 since the session began, a decline of $2.59 in cutout value may have also contributed to the dip in futures prices.