Grain Markets Head Toward USDA Report With Demand and Policy in the Spotlight

Prices chopped around unchanged to end the week with traders positioning ahead of Tuesday’s USDA yield update and how the mid-term Blue Wave win will affect the world economy and raw material use. World weather forecasts remain consistent and largely non-threatening while fresh demand news from China was a welcome ray of bullish news this week. The USDA is not expected to retreat from their surprising large October yield increases, with beans posting significant losses over the last 2 weeks on the expectation of yet another US bean yield increase, potentially to 54 BPA nationally. The bulls need some help from the USDA and SA weather, which are things that have not been helpful this fall.

News and Notes:

• Cold temperatures will move in over the Midwest and Delta this weekend with limited rain. Harvest has slowed with this week’s rains but should be complete by Thanksgiving. Downed corn remains a problem in the WCB. SA weather remains non-threatening.
• The daily December corn, January bean, December wheat, and January diesel are on Page 2 and show the bearish trends that have taken over each market. Lower fuel prices are welcome, but they also have pressured bio-fuel margins. The funds are still long almost 800 MBU in beans, which is a concern if the USDA raises yield again. The grain positions are the mirror opposite with a 400 MBU long in corn and a 400 MBU short in wheat. Other than the grain and soy markets being historically oversold, there is no real technical silver lining to talk about.
• The USDA issued a press release on Friday outlining the payments (record total of $13.8 billion) for the 2025 ARC/PLC programs  and other updates to the program. The things I noticed were you do not have to choose between ARC or PLC, the new program defaults to the  higher payment for your operation. The other is the payment limit was raised from $125,000 to $155,000 with a maximum payout of $160,000. The sign-up period for the 2026 program is open. Please contact your local FSA office for any additional help.
• The cattle complex has been in full liquidation mode for the last 2-weeks with cash cattle trading at $218 and down nearly $20 since early October. Feeder cattle have seen steeper losses at prices are now $30 lower than the October highs. The losses in the equity markets spilled over into several economically sensitive commodity markets as the concern over slowing demand surfaces.
• The political fallout from the elections will leave the Republicans in a lame duck position, which may help the Farm Bill get passed. With the upcoming Democrat control of every committee, the Farm Bill becomes a larger priority as the Farm Bill also controls the SNAP and food stamp programs, which are strongly supported by the Dems. Currently, year-round E-15 is in the Bill, and if passed, would incrementally add over 2.6 BBU of additional corn use in the next 5-years. Depending on where you live, the ethanol mix lowers the price of gas roughly 50-70 cents a gallon for E-10 and closer to a $1 for E-15. Using trend yields, 2.6 BBU would require substantially more corn acres and ethanol blend facilities and push total corn usage over 8 BBU.
• There has been positive developments with China trade this week, but the trade has largely ignored it. China is discussing buying wheat (for the time in years) and move toward the Board of Trade and getting Chinese ag purchases closer to $30 billion annually.
• Weekly Changes: Corn –6 1/4 (Dec ‘26), -40 1/2 (Jan ‘27), Wheat -12 1/4 (Dec ’26), Crude +1339, Diesel -3444, Dow-533, US Dollar+445, Cattle-690, Feeder Cattle-1940, Hogs-535, Cotton+118, Milk-1 (16.73).

The lack of any rallies on the heels of the positive trade progress with China surprised me this week but promises are not enough to reverse the bears domination. Regardless of which side you voted for, the passage of a Farm Bill and year-round E-15 could be a great early Christmas present and help set a new higher demand price floor. Tuesday’s report cannot repeat the October price assault if there is any hope for a trend reversal. Have a great weekend.