Wheat Market Outlook:
Wheat prices remain dependent on trade prospects under a heavy global supply situation, geopolitical developments, and weather impacting the Northern Hemisphere winter wheat crops. Trade continues to be healthy with a slight slow down recently in sales domestically. Geopolitical developments remain hard to predict. The Black Sea region continues with the conflict unabated despite negotiations and talks. Dryness remains in place for a large amount of U.S. winter wheat area. Prices over the last few weeks fell back to levels seen prior to the November rally on trade deal optimism. The government report release on January 12 will set the tone over the near term and should be monitored. In particular, the winter wheat seeding report begins the data stream related to new crop supply.
KC hard red winter wheat prices moved higher on Monday. The March contract closed at $5.21. March HRW futures prices are moving in a range between $5.05 – $5.35 over the last three weeks. July harvest contract prices closed at $5.46 and have been oscillating between $5.30 – $5.60 over the same three-week period as shown in Figure 1. Breaking out of these ranges seems difficult without strong deterioration in the winter wheat crops or a major geopolitical shock.
Cash prices in Oklahoma, presented in Table 1, continue to move with futures prices with little movement in basis. The National Agricultural Statistical Service NASS) reported the price received for winter wheat in Oklahoma at $4.56 per bushel, up from $4.39 in October. On the policy front, USDA announced the payment rates under the Farmer Bridge Assistance Program at $39.95 per acre for wheat
The Foreign Agricultural Service (FAS) moves ever closer to catching up on the export sales report. On Monday, data for the week ending December 25 came out in the final catch up report. Hard red wheat shows accumulated exports at 213 million bushels with outstanding sales at fifty-six million bushels. A total commitment level of 269 million bushels places HRW ahead of the pace set by the USDA forecast of 325 million bushels as shown in Figure 2. Sales need to average around 2.5 million bushels per week to hit the current forecast. While this appears promising for hard red wheat, total wheat sales slowed a bit recently with soft red winter coming in weaker. Export inspections of wheat for the week ending January 1 are at 561 million bushels, above the 469 million bushels last year at this time. Global supply continues to grow as reports out of Argentina place the crop near a billion bushels, up over one hundred million from the current USDA forecast. Additionally, market analysts continue to adjust the Russia wheat crop higher and December exports out of Russia are robust. U.S. wheat exports face intense competition over the near term. Marketing should look for rallies on
weather and take advantage on particularly strong price movements that move through the upper end
of recent ranges
Soybean Market Outlook:
Soybean futures prices moved sharply lower over the last month. The uncertainty surrounding trade policy, biofuels policy, and South American weather prospects remain in place. January soybean future prices entered December at $11.25 and closed the month at $10.30 as shown in Figure 3. Monday saw January soybean futures price run higher to close at $10.47. The November contract closed at $10.75. Updated crush data and supportive export numbers fed into this rally. The technical portion of the rally should not be underestimated as traders returned from a long holiday break. When considering the three key points posited to be driving soybean prices, none of them are particularly supportive at present. Cash prices in Oklahoma are around $9.57 with -105 basis at Newkirk. Harvest prices came in near $9.80 with basis at 95 under the November contract
On January 2, NASS updated soybean crush data for November and showed 220.48 million bushels of soybeans processed during the month. While November crush came in approximately five percent higher than last November, the crush total was down 6.7 percent from October. Soybean crush in the first quarter of 2025/26 was 661.8 million bushels, up 49.5 million bushels over last year as shown in Figure 4. USDA projects a 110 million bushel increase for the marketing year. This seems promising when combined with soybean meal export sales data showing total commitments up seven percent and on pace for meeting USDA’s forecast. A note of caution involves soybean oil. November stocks of soybean oil totaled 2.16 billion pounds that came in well above expectations and almost 34 percent higher than last year. The growth in stocks materialized despite an extremely low extraction rate for oil in the crush data. The lower extraction rate bears monitoring because less oil per bushel changes the potential for crush margins. Since the crush expansion hinged on growth in biofuel usage of soybean oil, the slow start for biofuels leaves a mixed view of crush related data early in the marketing year.
Soybean oil usage for biofuels during the 2025/26 marketing year (October – September) only has two
months of official Energy Information Agency (EIA) but analysis on all available data through the first
quarter of the soybean oil marketing year points towards usage coming in well below the pace
necessary to hit the USDA forecast of 15.5 billion pounds. The EIA October feedstock usage for
biomass-based fuel showed soybean oil use at 1.006 billion pounds, down significantly from the
previous October. For the first quarter of the marketing year, my calculation is approximately 3.025
billion pounds. FAME biodiesel production remains weak and is impacting feedstock uptake.
The coming year should see an increase in soybean oil usage and biodiesel production given the major
changes in biofuel policy that incentivizes domestic feedstock and biodiesel production that are
waiting to be implemented. However, finalization of the policies is yet to occur. It may not happen until
extremely late in the first quarter and the uncertainty could impact soybean oil usage and crush
volumes.
Soybean exports and the disappointment around them is the main culprit in the recent price rundown.
China, thus far, bought over eight million metric tons of the twelve million stated in the agreement if
speculation on unknown sales is indeed Chinese buying. If the deadline was the end of February, they
are on pace to meet the agreement. Export sales data through December 25 show accumulated
exports at 560 million bushels, down from 1,040 million bushels at the same point last year.
Outstanding sales sit at 458 million bushels, up approximately twenty-eight million from last year.
Export inspection data released through January 1 had exports at 603 million bushels, down from 1,101
million last year. Despite Chinese buying, exports are lagging and the Brazilian crop looks likely to come in
at record levels.
Brazilian crop prospects get better with every passing week as rain moved into the drier regions of the
country over the last month. January and February weather is key to finishing the soybean crop, but
forecasts continue to show rain in the southern areas expected to be drier due to La Nina conditions
being present. In fact, Rio Grande de Sol had flooding in northern parts of the state due to heavy rains in
late December as shown in Figure 5. USDA’s 175 million metric ton forecast may not be moved in January,
but analysts are predicting a crop 3 – 5 million tons higher. Key growing regions of Argentina also received
rain and planting is well underway. South America is primed for a massive crop if the weather holds.
