Oversold Bounce or False Hope? Volatility Tightens Its Grip on Grain Markets

Prices tried to rebound in early trade and posted decent gains through lunch before settling back to close in the middle of the daily range. Sharp losses since Monday’s report set up an oversold bounce as other specifically bullish news was absent other than a big week of ethanol production and more decent flash sales of corn and beans. Outside markets saw extreme volatility as the metals continue to make new all-time highs on what looks more like a frenzy than an orderly trade. Crude oil pushed higher again in early trade before giving up those gains to finish with an ugly reversal loss while the stock indexes were down on inflationary news reports and restrictions on what type of chips Nvidia could sell to China. The extreme market-wide volatility is becoming commonplace and begins to dull traders good sense when assessing risk and putting in orders, which has added to the uncertainty. Thursday’s weekly export report should show another solid week of corn and bean sales as the daily sales reports were active for the last week.

News and Notes:

• Forecasts for both Brazil and Argentina remain conducive to unstressed crop development and in N Brazil the advancing bean harvest. After Monday’s USDA kick in the gut, the reality of monster corn and bean crops from SA adds to the over-supply problems in world agriculture. Wild temperature swings in the US have not been the best for adding weight to cattle, but winter looks to be setting in on a more consistent basis over the Midwest into late January.
• The daily November bean chart is on Page 2 and shows today’s close under the 200-DMA for the second time this week. The 200-DMA had held as unbreakable support since April and with the funds still holding a large long position, a weekly close under the daily 200-DMA would begin to break down the weekly and monthly charts which could lead to some ugly stop loss selling.
• China’s announced purchases of another 11 MBU of beans this morning nearly completes their 12 MMT obligation. It is curious that the market rallied so strongly on the announcement in October, but the reality of the executed sales has produced March bean prices $1.30 lower than the post-announcement high.
• Ethanol production was surprisingly strong last week but ethanol prices continue to slide lower and are now 11% or 15-cents a gallon lower than the same week in 2025. The USDA continues to have a lofty 5.6 BBU of corn used for ethanol, so ending stocks cannot afford any slowdown in ethanol production this summer.
• Crude oil’s $5 (9%) rally from last week was a possible area of support for corn and beans but after posting an impressive rally into lunch, prices retreated for an unexpected ugly reversal. Higher energy prices would be one very supportive factor if crude can move back into the $65-$70 a barrel range.
• The Supreme Court did not announce a decision on the case they heard about the legality of President Trump’s tariffs, and the EPA continues to drag out their bio-fuel and SRE decisions. Regardless of outcome of either, the market prefers certainty and both of those will matter to both raw material and equity prices when decided.

Verizon’s nationwide outage caused us several problems in communicating today and it reminded me just how annoying technology can be, but also how much we rely on our phones. There is no point in trying to sugarcoat the mess our markets are in and the tough outlook that no short or intermediate solution is on the horizon. With the wildcard issue of the US Supreme Court decision that could overturn Trump’s tariffs and the lack of any communication from the EPA about ethanol and bio-diesel mandates only adds to the chances that the markets could be shocked by a surprise release of either or both updates. An aggressive US renewable fuel policy would be a huge help to our industry, but red tape and big egos continue to delay a decision that should have been made months ago. Panic selling is never a good marketing plan but being overly patient over the last 2 ½-years has been a disaster, so 2026 will be a unique challenge to find the opportunities and take advantage of them when they show up.