Grain prices wrapped up Monday with some mixed downturns in livestock futures.
Grains decline as year-end adjustments take hold
The grain markets saw a drop on Monday, largely due to low trading volume as hedge funds and money managers engaged in year-end adjustments. Kevin Duering from KD Investors noted that algorithmic trading influenced the market even with fewer traders physically present. “It used to be that everyone took a week off around the holidays, so any small price movement meant something significant. But now, with computers, there’s always a bit more activity than we’d like,” he shared.
He mentioned that the grain market reached the upper end of its trading range until last Wednesday, when profit-taking and farmer sales facilitated a pullback. “Producers likely need to execute end-of-year sales, especially since March corn was over $4.50 – the second-highest price since June,” he added.
Overall market risks affect grain selling
According to Dühring, there has been a notable shift in precious metals like gold and silver from their peak values, while high oil prices have introduced risks in the broader market, influencing the grain sector as well. “Long-term, this path will remain challenging on a macro scale, meaning in low-volatility sessions, you’re often swayed by factors unrelated to actual supply and demand,” he explained.
Düring anticipates that 2026 will be significant for macro-level adjustments by asset managers, hedge funds, and banks that could impact grain prices. “The key takeaway is how metals, particularly gold and silver, have been performing, potentially signaling dramatic shifts ahead. The last time we faced a similar situation was in 2010, following the 2008 financial crisis,” he noted.
Market eyes January’s WASDE
One important factor currently on the radar is January’s WASDE report. Duering suggested that the grain market is either maintaining a range or establishing a pattern as new information emerges. For corn, he feels there’s a need to lower yield estimates. “There’s a lot of data that appears to be inaccurate, so it should be adjusted downwards. But are they going to do it sufficiently? I have my doubts.” He highlighted that the USDA expects 16.7 billion bushels, while previous figures were at 16.2 billion.
On the other hand, soybean export demand, or at least inspection, has plummeted by 46% since the beginning of the year, possibly prompting WASDE to cut export numbers. Dulin commented, “They might want to halt exports altogether. I can’t say for sure if that’s what they’ll decide. China claims they’ll keep purchasing, but can they actually ramp up from 12 million metric tons to 25 million? I’m uncertain about that.”
Brazil’s weather impacts soybeans
Recent favorable weather in Brazil has led to rising yield estimates above 180 MMT, thereby affecting the soybean market. However, Duering pointed out that Argentina is facing a drier climate in the southern regions, which could diminish yields. “It’s getting a bit dry down there. Yet, it’s hard to feel too optimistic when South America is expanding,” he remarked.
Wheat prices stumble despite previous gains
Wheat futures finished last week on a positive note but struggled to maintain that momentum on Monday, even as risks linger. “Ukraine’s infrastructure is largely incapacitated, operating at around 20% capacity, which is a major concern. Although peace negotiations were happening over the weekend, there are still significant deadlocks. Headline risks remain quite prevalent,” Dooling stated.
He also expressed concern for wheat crops due to potential weather challenges. “Significant cold waves could pose risks not only in the Black Sea region but also following warmer spells in Europe and the U.S. Demand is solid, but worries over potential cancellations of U.S. wheat by China, coupled with ample global supplies, weigh down the market,” he said.
Stable cattle market outlook
Live cattle prices showed a mixed result, while feeder cattle ended slightly higher. However, they both remain within a stable trading range. Düring predicted that this trend will likely persist until year-end. Dulin noted that the market feels like a tug-of-war, caught between limited supply and government efforts to reduce beef prices. “There’s a sort of restraint on the market, preventing hedge funds from fully committing to long positions as they’re wary of political repercussions,” he added.
Still, there’s hope for a rebound by spring. “I wouldn’t be shocked if the market began trending upward, simply following the spot market dynamics. It’s just a question of timing,” he remarked. Another uncertain factor remains the timeline for reopening the Mexican border to cattle imports.
