Grain Market Report: External Factors Currently Influencing Corn, Wheat, and Soybean Prices

Insights from the Latest AgWeb Markets Now Interview

During my recent discussion with Michelle Rook on AgWeb's Markets Now, I offered my analysis of current trends in agriculture, focusing on the corn, soybean, wheat, and cattle markets. Catch the complete interview for all the details.

Market Overview: Grains and Livestock

Michelle Rook welcomed viewers to Markets Now, joined by Darin Newsom, Senior Market Analyst at Barchart. The session opened with observations of rising grain prices and some downward pressure in the livestock sector. Michelle asked Darin about the grain rally, questioning whether it was primarily driven by fund rebalancing as the new year begins.

Fund Activity and Seasonal Trends

Darin responded that while fund rebalancing could be a factor, it's important to note that funds were already holding long positions in corn and soybeans at the close of 2025 and carried those into 2026. If funds were shifting to other markets with stronger fundamentals, we might expect more selling pressure. Instead, the current activity seems to resemble commercial buying, especially after soybeans dropped sharply in recent weeks, attracting some light commercial interest. Darin cautioned against overemphasizing China's role in the market, noting that seasonal patterns and light trading volumes are typical for this time of year. Recent firming in basis and narrowing spreads suggest a seasonal uptick in demand as China secures additional supplies ahead of Brazil’s next harvest.

China’s Grain Purchases and Market Impact

Michelle noted that China is approaching 12 million metric tons in purchases, with some estimates closer to 10 million. She asked if demand would drop off once that threshold is reached. Darin explained that the 12 million figure is misleading, as it represents only about half of what the U.S. shipped to China the previous year. He emphasized that the real turning point will be when Brazil’s harvest begins, as that will dictate when Chinese demand shifts away from U.S. supplies.

Michelle also raised concerns about whether all booked shipments would actually be delivered, especially given ongoing geopolitical tensions and the potential for Chinese retaliation. Darin pointed out that China is likely to wait until it has secured Brazilian supplies before canceling U.S. orders, a common business strategy in commodity trading.

Venezuelan Oil and Its Influence on Markets

The conversation shifted to Venezuela, where recent developments could allow the administration to sell tens of millions of barrels of oil. Michelle asked how this might affect markets and what it signals about U.S. policy. Darin argued that the main objective is to access Venezuelan oil and revenue, with little real change in leadership. He compared the situation to similar geopolitical maneuvers elsewhere, suggesting that such actions are not new and do not represent genuine regime change.

Michelle then questioned whether increased oil supply from Venezuela could put downward pressure on crude prices. Darin agreed, noting that as the world transitions toward renewable energy, oil markets have become less reactive to geopolitical disruptions. He warned, however, that while lower energy prices could benefit consumers, they might also negatively impact the agricultural sector, which is linked to energy markets.

Outlook for Corn and Soybeans

Michelle inquired about the potential for recovery in corn and soybean prices, specifically whether soybeans could climb above $11 and corn above $4.50. Darin acknowledged the influence of technical factors like the 200-day moving average, especially with the rise of algorithmic trading. He suggested that while technicals may allow for some upward movement, the market will remain in its current trend until a significant external factor intervenes.

Michelle observed that when prices rise, farmers often consider selling into rallies. Darin agreed that while some sales may occur, many producers hesitate at the last moment. He emphasized that the long-term fundamentals do not support a major rally, so producers should consider locking in prices for future years if non-commercial buying is driving the current move.

Wheat Market Dynamics

The discussion turned to wheat, where Michelle noted the potential for funds to cover short positions. Darin confirmed that funds have been short for some time, but recent gains in cash indexes and narrowing spreads indicate short-term demand. He remarked that the wheat market often rebounds after December, with commercial buying emerging as prices become attractive. However, with new crops already planted, attention will soon shift to spring conditions and the likelihood of ample supplies.

Michelle asked if unseasonably warm winter temperatures could raise concerns about winter kill and add a weather premium. Darin joked that winter kill is a perennial topic, but wheat is remarkably resilient and rarely succumbs to winter conditions.

Supreme Court Decision and Market Effects

Michelle brought up the upcoming Supreme Court ruling on IEEPA tariffs, questioning its potential market impact. Darin expressed skepticism, suggesting that markets may be indifferent to the decision, especially if the administration chooses not to act on it. Even if the ruling is significant, any changes are likely to take time to materialize.

Cattle Market Update

Finally, Michelle asked about the cattle market, wondering if current softness was simply due to profit-taking ahead of cash market developments. Darin agreed, noting that participants are waiting to see how the cash market evolves and whether futures can surpass 2025 highs in early 2026.