A Bounce Into Resistance: Grain Markets Struggle Under the Weight of Oversupply

A tough week ended with modest bounces as short covering and end user pricing was noted ahead of the 3-day MLK holiday weekend with markets closed on Monday. After the neutral numbers for beans and wheat, the corn numbers were the villain of the week as a big crop got even bigger to increase the challenge of rallying prices and cutting ending stocks. With multiple world political crosscurrents and trade battles impacting every market, the easiest way to look at our markets as we head deeper into 2026 is to know the US and world are oversupplied against demand and rallies will be capped by that overhanging bearish fundamental. Brazil’s bean harvest will take center-stage in the 4-5 weeks ahead, until the USDA begins to put out their projected numbers for US trend line yield and planted acres in late February.

News and Notes:

• SA weather remains non-threatening for the next week with welcome rain coming to Argentina in the drier regions. Brazil’s harvest continues to pick up momentum with dry enough conditions in the north for harvest to push past 10% next week. US weather turns brutally cold early this week for the Great Lakes region with a warmer late week outlook. The drought monitor is not as closely watched in the winter, but Illinois continues to show concern with over 25% of the state abnormally dry or drier. A wet late winter is needed to recharge the poor subsoil moisture levels.
• The daily new crop charts are on Page 2 and speak for themselves as corn was kicked in the head by the USDA report while the bean and wheat charts held together well after a mostly neutral report. The funds have moved into larger corn short positions, while short the bean and wheat markets, but with positions not much larger than last Friday. Corn will need time to continue healing in a choppy trade and not take out the weekly low ($4.45 ¼), to mount a comeback after the report losses. Beans closed back over the 200-DMA while wheat closed back over the 20-DMA for a ray of hope to end the week.
• Friday was full of cattle news and volatility as both feeders and live cattle futures were down sharply in mid-morning trade on lower cash trade for the week and more reports of screw worm close in Mexico closer to the US border. In the past, screw worm reports have met with sharp rallies, but ahead of the three-day weekend, sizable fund selling on profit taking and risk mitigation were big parts of the daily volume. The daily chart on Page 2 is showing some fatigue with the daily losses, the largest since early November. The pattern is trending toward a potential head and shoulders formation which would indicate a lower direction for the next leg. The 20 (light blue line) and 100 (pink) DMAs are important technical support for next week’s trade after two consecutive weekly losses.
• The Sales Targets were updated for 2025 and 2026 corn and 2026 beans. After the January USDA report disaster, targets were lowered to address the report and the accelerating Brazilian bean harvest. Please look at the updates and call me if you have any questions.
• Weekly Changes: Corn -21 (March ‘26), -14 1/4 (Dec ‘26), Beans – 5 3/4 (May ‘26), - 2 3/4 (Nov ‘26), Wheat – 1/4 (July ’26), Crude +32, Diesel +1026, Dow -189, US Dollar +311, Cattle -158, Feeder Cattle -428, Hogs +298, Cotton +25, Milk +21 (15.07).

With the MLK holiday on Monday, the markets will be closed until the Monday night open. News has been slow over the weekend but the escalating friction between the US and our NATO allies over increased tariffs unless the US can buy Greenland, will impact the financial markets which could spill over into the grain trade. As Brazil’s bean harvest moves along, the expectation of a record 6.5-6.8 BBU crop will keep pressure on the bean complex as the world export pipeline is refilled. With the Trump Administration announcing they will release updated SRE/RVO mandates by early March, a potential bullish twist could be found if the mandates match the industry recommendations. The only way to chew through the huge domestic and world corn and bean stocks (without a major weather issue) is to develop or increase use through bio-fuel programs, whether it is increased ethanol mandates (year-round E-15) and/or SAF acceleration. After Friday’s bounces, some buying momentum may be seen when the markets re-open Monday night. Enjoy your Sunday.