China’s Likely Purchases of U.S. Soybeans: 10 MMT
Wheat review & outlook | Brazil’s Amazon soy pact at risk | FOMC Minutes
| LINKS |
Link: From Step 2 To STAX: How Brazil’s WTO Cotton Fight Reshaped
U.S. Policy — And Helped a Rival Exporter Surge
Link: HHS Rolls Out First-Year State Allocations for $10B Rural Health
Transformation Program
Link: USDA Seeks Overhaul of Foreign Farmland Disclosure Rules Amid
Security Concerns
Link: Video: Wiesemeyer’s Perspectives, Dec. 27
Link: Audio: Wiesemeyer’s Perspectives, Dec. 27
| Updates: Policy/News/Markets, Dec. 30, 2025 |
| UP FRONT |
Top Stories
— Brazil’s Amazon soy pact at risk as traders weigh tax losses over forest protections: A new Mato Grosso law that would penalize companies participating in conservation programs is pushing major traders to consider exiting the Amazon Soy Moratorium—potentially unraveling a key brake on soy-linked deforestation and setting off broader fights over Brazil’s environmental safeguards.
— Black Sea grain infrastructure hit as Russia/Ukraine peace talk signals collide: Fresh Russian strikes on Ukrainian port facilities and a grain-laden vessel heighten export-corridor risk just as diplomatic messaging whipsaws, keeping global wheat markets on edge over whether disruption deepens or negotiations revive.
— Tehran protests flare as Iran’s currency crisis deepens: The rial’s record-low plunge is stoking inflation fears and sporadic unrest in Tehran’s bazaars, pressuring Iran’s economic leadership as sanctions squeeze revenues and politically sensitive fuel-price moves loom.
Financial Markets
— Equities today: U.S. futures dip modestly in thin year-end trade with attention squarely on the 2 p.m. ET release of December FOMC minutes as markets reassess 2026 rate-cut expectations.
— Equities yesterday: Major U.S. indexes posted moderate declines versus Dec. 26, consistent with profit-taking and cautious positioning ahead of the Fed minutes.
— Dollar’s slide deepens as rate-cut expectations loom over 2026: The greenback is tracking its steepest annual decline since 2017 as markets lean into Fed easing next year and rate differentials/policy uncertainty erode dollar support.
— FOMC Minutes highlight policy fault lines as new voters loom: The minutes are expected to emphasize widening internal disagreements on cuts vs. holding steady, while investors start pricing the influence of the 2026 voting rotation.
— Global equities outshine U.S. in 2025 as capital flows pivot abroad: International stocks outperformed U.S. benchmarks by the widest margin since the financial crisis, fueled by valuation rebalancing, China tech momentum, and lingering tariff-related risk perceptions.
Ag Markets
— USDA daily export sales for 2025/26: Reported soybean sales include 136,000 MT to China and 231,000 MT to unknown destinations, keeping demand watch focused on near-term shipment pace.
— China reserve talk pressures corn as import hopes fade: Chatter about a potential Chinese reserve release undercut the budding narrative for U.S. corn export demand and quickly turned market sentiment defensive.
— China soybean buying spurs CIF strength as January contract nears delivery: Heavy buying for Feb–Apr shipment firmed CIF values even as nearby futures weakness reflected January liquidation and delivery mechanics rather than collapsing demand.
— South American corn & soybean crop update: Brazil conditions remain broadly favorable with rains supporting yield prospects, while Argentina shows emerging dryness risks in spots—keeping weather volatility as the key swing factor.
— Wheat prices in 2025: Cheap grain, big spreads — and a complicated setup for 2026: A well-supplied global balance sheet capped rallies in 2025, but class-by-class quality/protein spreads drove the real price action and remain major 2026 sensitivities alongside Black Sea risk and acreage economics.
— Biofuel policy breaks a long-standing oil price link: A farmdoc daily analysis argues soybean oil and palm oil no longer move in lockstep because U.S. renewable fuels policy/credits increasingly dominate soybean oil pricing while palm oil is driven more by Southeast Asian supply and export policy shocks.
— Soybeans lead as Brazil caps 2025 with double-digit grain export growth: ANEC shipping schedules point to roughly 10% y/y growth in Brazil’s combined soybean/meal/corn/wheat exports, led by soybeans and late-year corn strength, underscoring Brazil’s expanding footprint in global feed and oilseed trade.
— Agriculture markets yesterday: Grain and oilseed futures were mostly lower versus Dec. 26 (corn, beans, meals, wheats) while soy oil and feeder cattle were higher, reflecting mixed demand signals and positioning into year-end.
Farm Policy
— USDA clears final rule to implement OBBBA farm program changes: OMB’s completed review clears the runway for USDA to publish the ARC/PLC/DMC updates and operationalize OBBBA-driven changes for the 2025 and 2026 program years.
Farm Inputs
— Precision spraying delivers input savings — and unexpected yield gains: Deere’s See & Spray adoption surged in 2025 with sizable herbicide reductions and early indications of soybean yield upside, reinforcing a broader shift toward data-driven, site-specific agronomy.
Energy Markets & Policy
— Tuesday: Oil prices steady as geopolitical risks offset oversupply concerns: Crude held firm as renewed Middle East and Russia/Ukraine tension supported a risk premium even while traders remain wary of a 2026 supply glut.
— Monday: Oil prices jump as geopolitical risk premium returns: Brent and WTI rallied more than $1 as markets repriced peace-talk fragility and Yemen-related risk, temporarily overpowering the longer-run oversupply narrative.
China
— Beijing signals stronger state hand in farm policy as new five-year plan nears: Xi’s rural revitalization messaging points to tighter state involvement via production targets, reserve policy, land-use controls, and selective price supports heading into the 15th Five-Year Plan.
Transportation & Logistics
— Rail giants pitch coast-to-coast merger as antidote to trucking dominance: Union Pacific and Norfolk Southern are selling regulators on a transcontinental network that would shift freight from trucks to rail and unlock sizable revenue/cost synergies—setting up a major STB review fight.
Weather
— NWS outlook: Lake-effect snow persists near the Great Lakes, arctic air grips much of the eastern U.S. (including Florida) before a brief Plains warm-up, and Southern California faces flash-flood risk around New Year’s from an anomalous moisture-fed system.
| TOP STORIES — Brazil’s Amazon soy pact at risk as traders weigh tax losses over forest protectionsA new Mato Grosso law stripping tax incentives from conservation participants is pushing major grain traders to consider exiting the landmark Amazon Soy Moratorium, threatening one of the world’s most effective anti-deforestation agreements Some of the world’s largest soybean trading firms are preparing to abandon Brazil’s Amazon Soy Moratorium, a voluntary agreement credited with sharply slowing deforestation in the Amazon rainforest, as they seek to preserve lucrative tax incentives in Brazil’s top farm state, according to people with direct knowledge of the matter cited by Reuters. The potential exit is driven by a new law in Mato Grosso — Brazil’s largest soybean-producing state — that will, starting in January, strip tax incentives from companies that participate in conservation programs stricter than Brazilian law. Mato Grosso harvested roughly 51 million metric tons of soybeans in 2025, surpassing Argentina’s production. Major traders that signed the 2006 moratorium — including ADM, Bunge, Cargill, Cofco, and Brazil’s Amaggi — have facilities in Mato Grosso that benefited from state tax breaks. Sources told Reuters that most firms are likely to prioritize retaining incentives rather than remaining in the moratorium, a move that could effectively end the pact. A preliminary report by Mato Grosso state auditors found that grain traders received about 4.7 billion reais (roughly $840 million) in tax incentives between 2019 and 2024. ADM and Bunge were identified as the largest beneficiaries, each receiving about 1.5 billion reais, according to the head of the state audit court. The Amazon Soy Moratorium bars signatories from purchasing soybeans grown on land deforested after July 2008. Researchers estimate that without the moratorium and related measures, an area of rainforest roughly the size of Ireland would have been cleared for soy production, particularly when compared with expansion patterns in neighboring countries. Environmental groups warn that unraveling the agreement would have consequences well beyond soy. Greenpeace’s Cristiane Mazzetti told Reuters that companies could maintain their zero-deforestation commitments, calling withdrawal “a dangerous precedent” at a time of climate emergency. Brazil’s federal government has challenged the Mato Grosso law in court, arguing that it undermines national environmental policy. Andre Lima, a senior Environment Ministry official, said the government has heard that some or many companies would abandon the moratorium for economic reasons if the incentives are removed, though firms have not formally notified the ministry. The dispute underscores the tension facing President Luiz Inacio Lula da Silva, who has pledged an “ecological transformation” of Brazil’s economy while contending with a powerful farm lobby in Congress. Environmentalists fear that if the soy moratorium collapses, it could embolden efforts to weaken other safeguards, including parts of Brazil’s forestry code and protections for Indigenous lands. Legal uncertainty continues to hang over the pact. Brazil’s antitrust authority has opened a separate probe into whether the moratorium violates competition rules, while soy farmers in Mato Grosso have sued traders for roughly $180 million over their participation in the agreement. Temporary court rulings have halted parts of the antitrust action but allowed the Mato Grosso tax law to take effect as environmental groups seek a final judicial resolution. — Black Sea grain infrastructure hit as Russia/Ukraine peace talk signals collide Russian strikes damage Ukrainian port facilities and a grain-laden vessel even as diplomatic rhetoric oscillates between negotiation and escalation, unsettling global wheat markets. Russian attacks on Ukraine’s Black Sea export infrastructure have sharpened uncertainty for global grain markets, even as intermittent signs of potential peace talks flicker in the background. Ukraine’s prime minister, Oleksiy Kuleba, said Russian forces struck infrastructure in the Odesa region, damaging port facilities at Pivdennyi and Chornomorsk, along with a Panamanian-flagged civilian vessel. The ship was reportedly loaded with grain and oil storage tanks at the time of the attack, underscoring continued risks to Ukraine’s agricultural export corridor. The strikes come amid tentative optimism in some quarters that negotiations between Ukraine and Russia could eventually bring the war to an end. That optimism was quickly tempered, however, after the Kremlin said its negotiating posture would harden following what it claims was an attack on a Russian presidential residence. Ukrainian officials flatly denied the allegation, calling it a fabrication designed to justify further military escalation. “This terrorist action is aimed at collapsing the negotiation process,” Kremlin spokesman Dmitry Peskov said, adding that Russia would toughen its position in talks, though it would not formally withdraw from negotiations. The juxtaposition of renewed attacks on grain export infrastructure and conflicting diplomatic signals has continued to roil global wheat markets in particular, as traders weigh the possibility of either a breakthrough toward peace or a prolonged period of disruption to Black Sea supply flows. — Tehran protests flare as Iran’s currency crisis deepensRial’s record low fuels inflation fears, unrest in the Grand Bazaar, and pressure on Iran’s economic leadership Protests broke out in Tehran after Iran’s currency plunged to a record low, intensifying economic stress in the sanctions-hit country. Iran’s state broadcaster showed blurred footage of what it called limited demonstrations by merchants in the Grand Bazaar, but social media accounts suggested a broader shutdown as shopkeepers closed their stores. The unrest followed the rial’s slide to an unprecedented 1.45 million per U.S. dollar on the unregulated market, before recovering to around 1.38 million. The sharp depreciation has driven up food prices and revived fears of nationwide protests like earlier waves that have shaken Iran in recent years. State media said the government’s economic team convened an emergency meeting to address currency, trade, and public welfare policies. The semi-official Mehr news agency reported that Central Bank Governor Mohammad-Reza Farzin had been dismissed, though authorities have not confirmed the move. While the demonstrations remain limited, they underscore the strain of inflation exceeding 40% and rising living costs. Sanctions continue to weigh heavily on the economy by constraining oil revenues. Tensions escalated after Israel’s June airstrikes on Iranian nuclear sites—actions backed by the Donald Trump administration—which derailed talks with Washington over sanctions relief. Facing revenue shortfalls, Tehran has moved to raise heavily subsidized gasoline prices for the first time since 2019, a step that previously triggered deadly unrest. The government’s newly unveiled draft budget seeks a 60% increase in tax revenues and proposes a 20% pay rise for public-sector workers and pensioners — well below the pace of inflation. Videos circulating online appeared to show security forces using tear gas in the Grand Bazaar, though their authenticity could not be independently verified. |
| FINANCIAL MARKETS |
— Equities today: U.S. equity futures are mildly lower as year-end profit taking continues while global equity markets were little changed overnight amid mostly quiet financial market news wires. There are no Fed speakers today, however, the December FOMC meeting minutes will be released at 2:00 p.m. ET which will likely be the most widely followed catalyst of the day as traders assess still uncertain Fed policy rate expectations for 2026. In Asia, Japan -0.4%. Hong Kong +0.9%. China flat. India flat. In Europe, at midday, London +0.5%. Paris +0.4%. Frankfurt +0.5%.
— Equities yesterday:
| Equity Index | Closing Price Dec. 29 | Point Difference from Dec. 26 | % Difference from Dec. 26 |
| Dow | 48,461.93 | -249.04 | -0.51% |
| Nasdaq | 23,474.35 | -118.75 | -0.50% |
| S&P 500 | 6,905.74 | -24.20 | -0.35% |
— Dollar’s slide deepens as rate-cut expectations loom over 2026
Persistent rate-cut pricing and shifting global monetary dynamics push the U.S. currency toward its steepest annual decline in nearly a decade, with strategists warning of further depreciation into next year
The U.S. dollar is on pace for its most significant annual drop since 2017 as markets increasingly price in Federal Reserve interest-rate cuts and a dovish policy trajectory for 2026. The decline reflects a combination of waning rate-differential support, political and fiscal uncertainty, and stronger performance from other major currencies. Expectations that the Fed will trim policy rates next year are at the forefront of downward pressure on the greenback, a trend echoed by currency strategists forecasting continued depreciation through mid-2026.
— FOMC Minutes highlight policy fault lines as new voters loom
December meeting record underscores internal divisions over rate cuts, while attention shifts to the 2026 voting roster
Minutes from the Dec. 9–10 meeting of the Federal Open Market Committee, released today, are expected to underscore how divided policymakers have become over the next phase of U.S. monetary policy. While public comments since the meeting have already hinted at those differences, the minutes themselves are unlikely to quantify the split, relying instead on familiar Fed language such as “some,” “few,” “many,” and “several” to describe competing views.
The underlying debate centers on whether the economy warrants additional rate cuts or whether the prudent course is to pause and assess the cumulative impact of earlier easing. That tension was evident in the final vote on the quarter-point cut: Stephen Miran dissented in favor of a larger half-point reduction, while Austan Goolsbee and Jeffrey Schmid opposed any cut and argued for holding rates steady.
Looking ahead, market focus is already shifting beyond the December decision to the evolving composition of the committee. Greater scrutiny is likely to fall on Beth Hammack, Neel Kashkari, Lorie Logan, and Anna Paulson, all of whom rotate into voting roles in 2026. Their policy leanings could prove decisive as the Fed weighs inflation risks against slowing growth and determines whether December’s cut marks a midpoint — or a pause — in the easing cycle.
— Global equities outshine U.S. in 2025 as capital flows pivot abroad
Chinese AI breakthroughs and enduring tariff strains on U.S. markets help propel overseas indices past American stocks, prompting broad investor diversification
In a notable shift for global financial markets in 2025, U.S. equities — long the engine of investor returns — lagged significantly behind international stocks, with the performance gap the widest since the global financial crisis. U.S. benchmarks such as the S&P 500 gained around 18%, but were far outpaced by the MSCI All Country World ex-U.S. index, which climbed nearly 30%.
Several factors underpinned this divergence:
🔹 Investors question U.S. valuations and seek global opportunity
Concerns about elevated valuations in U.S. tech and broader markets — particularly following tariff-related volatility — encouraged allocators to broaden their focus geographically. The disproportionate concentration in a handful of mega-cap names amplified this effect, making non-U.S. markets relatively more attractive.
Financial Times
🔹 China’s AI innovation reshapes the technology race
Breakthroughs from Chinese artificial-intelligence firms, especially the success of startups like DeepSeek that challenged established Western models, spurred fresh interest in Asian tech equities and underscored the rising competitiveness of non-U.S. innovation hubs. DeepSeek’s market impact in early 2025 was widely viewed as a “Sputnik moment” for global AI, unsettling some global tech valuations before stabilizing.
🔹 Trump’s tariff legacy still reverberates
The lingering effects of the Trump administration’s trade policies — including broad tariffs that roiled markets and investor sentiment — contributed to the recalibration of portfolio strategies. Even as U.S. markets regained some footing later in the year, the broader narrative of U.S. policy-driven risk helped facilitate capital flows into Europe, Asia, and emerging markets.
🔹 International markets deliver standout gains
Across regions, indices outperformed U.S. peers: China’s market advanced more than 30%, Hong Kong’s Hang Seng was up nearly 28%, and South Korean equities surged over 70%, led by tech sectors. European markets also rebounded strongly, supported by fiscal stimulus and local growth optimism.
Investor Takeaway: The widening performance gap in 2025 reflected both a search for value beyond the United States and a recognition that innovation and growth opportunities are increasingly global. This dynamic has intensified discussions among asset managers about diversifying away from a U.S.-centric focus toward more balanced, geographically diversified portfolios.
| AG MARKETS |
— USDA daily export sales for 2025/26:
• 136,000 MT soybeans to China and
• 231,000 MT soybeans to unknown destinations
— China reserve talk pressures corn as import hopes fade
Rumors of a state corn release undercut U.S. export optimism just as traders weighed potential Chinese buying
Corn prices weakened sharply after talk circulated that China could move to release corn from its state reserves, a development that would immediately cool near-term import demand. The timing was particularly damaging for the market, coming just as traders were beginning to consider whether Chinese buyers might step back into the U.S. corn market.
A reserve release would signal that Beijing believes domestic supplies are sufficient to manage prices internally, reducing the urgency to source corn from abroad. That prospect undercut speculative buying and encouraged funds to lean defensive, especially after recent sessions had hinted at stabilizing demand.
Market participants also noted that reserve sales — whether actual or merely anticipated — tend to cap rallies by reminding traders that China has policy tools beyond imports to manage feedgrain prices. Even without an official announcement, the possibility alone was enough to shift sentiment and pressure futures.
In short, what had been a budding demand narrative for U.S. corn quickly gave way to renewed caution, with traders wary that Chinese policy actions could keep export prospects sidelined in the near term.
— China soybean buying spurs CIF strength as January contract nears delivery
Heavy late-year purchases lift CIF values, raising questions about January delivery economics as the Jan contract heads into first notice day
China was an active buyer in the soybean market again, booking nearly 600,000 metric tons of soybeans for February–April shipment in a single day, according to trade chatter. With those additions, cumulative Chinese purchases for nearby shipment are now estimated to be approaching 10 million metric tons, a scale large enough to materially influence global pricing signals.
The buying wave had an immediate impact on the CIF (cost, insurance, and freight) market, where soybean values firmed notably. Traders reported CIF beans moving higher on the back of the fresh demand, underscoring tightening availability for late winter and early spring loadings into China.
That strength in CIF values, however, is also casting doubt on January delivery economics. Elevated CIF levels can make nearby deliveries less attractive relative to rolling positions forward, particularly as the market transitions between contract months.
Monday’s futures action reflected that tension. The soybean market’s weakness was largely tied to liquidation of the January contract, rather than a broader shift in supply-demand fundamentals. With the January contract’s first delivery intention set at the close of trading today, traders appeared focused on cleaning up nearby positions ahead of potential deliveries.
In short, the market is sending two signals at once: strong underlying demand from China supporting CIF values, while near-term futures pressure reflects technical positioning and delivery mechanics rather than a collapse in demand.
— South American corn & soybean crop update
Current planting/development and weather factors
South American row-crop planting and development continues to make progress under mixed weather patterns:
• Brazil: Crop conditions mostly positive. Recent widespread rainfall has benefited both soybeans and corn, particularly enhancing soybean pod-fill prospects. Early harvest activity for soybeans is expected to begin in January. Good rains across much of the primary growing regions support development and keep yield prospects firm. Local analysts have been raising soybean crop forecasts on the back of these favorable conditions.
• Argentina: Contrasting conditions are emerging, with dryness in portions of southern Argentina potentially stressing young corn and soybean stands. The first phase of corn planting is largely finished, and the second phase is underway, but soil moisture is declining in some areas, which may stress early growth. Argentine soybean crop estimates hover around 49 MMT and around 54 MMT for corn.
• Paraguay: Forecasts call for cooler, wetter weather over the next 1–2 weeks, which is generally supportive of corn and soybean development there.
Production outlook & estimates. Official and market forecasts point to strong South American output for the ongoing crop cycle:
• Brazil soybeans: USDA forecasts a record soybean crop for the 2025/26 marketing year around ~175 million metric tons, reflecting higher harvested area and above-average yields. Private forecasts are higher, from 178-180 MMT.
• Brazil corn: Brazil’s 2025/26 corn production is expected to remain robust, above the five-year average, with production around 137 MMT.
Soybean market sentiment: Planting and crop conditions broadly look favorable across Argentina, Brazil, and Paraguay, contributing to cautious optimism for robust crops and exportable supplies.
Trade factors: Ongoing geopolitical and trade shifts — such as China’s soybean buying patterns — continue to influence demand flows, though South American supply fundamentals remain a focal point for global markets.
Risks & weather uncertainties: Weather Variability: While much of Brazil benefits from recent rainfall, drier pockets in Argentina and some central Brazil areas could introduce variability in crop outcomes if dry spells persist.
Climate patterns: With La Niña influences waning, weather trends this season will continue to be monitored for their potential impact on late-season yield formation and harvest quality.
— Wheat prices in 2025: Cheap grain, big spreads — and a complicated setup for 2026
U.S. wheat spent much of 2025 under pressure from heavy world supplies and tough export competition, with class-by-class quality and basis dynamics driving the real story
Here’s what mattered most in SRW, HRW, HRS, white wheat and durum — and what could move the market in 2026.
Wheat in 2025 largely behaved like a “well-supplied” market: rallies struggled to stick, and the most consequential price signals often showed up in spreads between classes, not just the headline CBOT wheat board. USDA’s own price series captured the softness: the all-wheat cash price slid through the summer, with July posting the lowest monthly all-wheat price since September 2020 ($4.94/bu), followed by $4.84 in August.
By late December, export-oriented indicators still pointed to a relatively low-price environment: U.S. Wheat Associates’ (USW) weekly export price snapshot had March SRW around $5.09, March HRW around $5.15, and March HRS around $5.82.
That’s the “board” view. On the ground, 2025 was really a year of (1) plentiful supplies, (2) uneven weather/quality pockets, and (3) fierce competition from the Black Sea and other exporters — with the implications differing sharply by wheat class.
What drove U.S. wheat prices in 2025
1) A supply overhang — globally and domestically
Globally, USDA messaging through 2025/26 consistently emphasized large crops among key exporters (Canada, Argentina, EU, Australia, Russia) and rising global supplies. That capped upside for U.S. prices and made the U.S. highly sensitive to freight, FX, and protein/quality spreads rather than broad “shortage” narratives.
Domestically, wheat was also carrying weight. USDA’s June Acreage report put all-wheat planted area at 45.5 million acres (down 1%) — not huge, but not a tightness signal either. Meanwhile, mid-year stock data showed plenty of wheat in the system as reported June 1 wheat stocks were at 851 million bushels, up 22% y/y), reinforcing the “adequate supply” tone.
2) Competition and geopolitics stayed central — especially the Black Sea
Even with periodic geopolitical risk premia, the market repeatedly returned to “who can ship cheapest.” Reuters’ Black Sea analysis highlighted why traders keep focusing there: Russia and Ukraine together are such a large share of global exports that production/export uncertainty heading into 2026 can matter even when the world looks well supplied.
3) Low prices changed farmer behavior
The farm economics squeeze and the longer-run acreage drift away from wheat in parts of the Plains and Western Corn Belt were evident, as wheat struggled to compete with corn/soy returns and weather risk. That dynamic matters most for HRW and HRS (and it’s a key 2026 sensitivity).
Key issues by class of wheat
Soft Red Winter (SRW) — quality “mostly good,” but weather pockets mattered
SRW (CBOT) faced two 2025 crosscurrents:
- Big supply/cheap corn pressure on feed substitution and overall grain pricing power.
- Harvest/field conditions that created localized quality concerns (wetness, lodging, and lower falling numbers in some areas).
USW’s SRW reporting described a crop where buyers “should find good quality,” while still flagging lower falling numbers (an indicator of sprout/enzymatic activity risk) and region-specific impacts from rainfall. Others noted saturated SRW areas contributing to lodging and potential quality risk during the 2025 harvest window.
Market takeaway: In 2025, SRW wasn’t just “cheap wheat.” It was cheap wheat where quality pockets could swing basis and mill demand, especially when export demand wasn’t doing the heavy lifting.
Hard Red Winter (HRW) — Plains weather whipsaws, but quality held together
HRW (KC) is the backbone bread wheat class, so its story is always: Plains weather + protein + export competitiveness.
In 2025, the HRW crop was shaped by early drought and uneven rainfall, but USW quality summaries suggested the end product was broadly solid: test weights and falling numbers were acceptable and the crop generally graded well.
USDA also flagged that U.S. exports (and HRW exports specifically) were being supported by competitive prices and solid shipment pace in parts of the marketing year.
Market takeaway: HRW’s 2025 “issue set” was less about outright shortage and more about how Plains weather translated into protein spreads and export basis— and whether KC could sustain premiums versus CBOT when world supplies were ample.
Hard Red Spring (HRS) — protein premiums vs. acreage erosion
Spring wheat (Minneapolis/MIAX) remains the class where high protein can create meaningful premiums, even when wheat overall is depressed.
Quality metrics for 2025 looked supportive from a milling standpoint (USW and industry summaries cited high test weights, strong falling numbers, and protein in the mid-14% range). But the strategic issue is acreage and competition: Reuters and other reporting pointed to multi-decade low spring wheat acreage trends and the growing role of Canada (and at times Russia) in supplying similar quality into the world market.
Market takeaway: In 2025, HRS pricing was about protein value vs. plentiful alternative supply. In other words: HRS can be “tight” without the broader wheat complex being bullish.
Soft White (SW) — export demand and Asia mattered, with China a key swing factor
Soft white is export-sensitive (PNW). Late 2025 export market commentary from USW pointed to how quickly demand shocks can hit: canceled soft white sales to China were cited as a bearish factor that pressured markets and disrupted spreads.
Market takeaway: SW in 2025 reinforced an old rule: Pacific Rim demand headlines can move the PNW cash market fast, even if CBOT looks sleepy.
Durum — a small U.S. market, but global quality can still set the tone
Durum is its own animal (pasta/couscous). The U.S. durum crop is smaller, but pricing is highly sensitive to Canada, the world’s largest exporter.
Wet conditions in Canada led to concerns about mildew and sprouting damage in 2025 durum, complicating what otherwise looked like a large Canadian crop. Quality summaries also showed U.S. durum quality metrics that warranted attention (e.g., falling number variability).
Market takeaway: Durum in 2025 was a reminder that quality is supply — a big crop can still behave like a tight market if quality disappoints.
Looking ahead: 2026 market-sensitive issues for wheat. Here are the levers most likely to matter for 2026 pricing and spreads:
- Black Sea production/export policy and security risk
Reuters has already framed the Black Sea as a potential constraint into 2026 depending on weather and profitability, with Ukraine especially exposed. - Whether global “record crop” momentum persists
USDA summarized 2025/26 as a surge year for global production (Canada, Argentina, EU, Australia, Russia) and a well-supplied world balance sheet. If that continues into the next crop cycle, rallies may again be hard to sustain. - U.S. acreage and producer economics (HRW/HRS)
The economics-driven retreat from wheat acreage is a slow-burn bullish ingredient — but only if weather or global supply breaks in wheat’s direction. - Protein/quality spreads (especially HRS and HRW)
If 2026 brings weather stress in the Northern Plains/Canadian Prairies, the market can shift quickly from “too much wheat” to “not enough high-quality wheat,” widening HRS/HRW premiums. (2025 quality reporting shows how central these metrics are to the trade.) - China and Asia demand for export classes (SW and SRW/HRW)
Soft white is particularly exposed to Pacific Rim buying patterns; late-2025 cancellations were a concrete example of demand volatility. - U.S. farm price expectations and the policy/forecast backdrop
USDA’s December WASDE held the 2025/26 season-average farm price at $5.00/bu, which is a useful reference point for how “normal” the government views current price structure heading into 2026 planning.
— Biofuel policy breaks a long-standing oil price link
Why soybean oil and palm oil no longer move in lockstep — and what it means for U.S. farmers and biofuels markets
For decades, soybean oil and palm oil prices tended to rise and fall together, reflecting their role as close substitutes in global food and industrial markets. That relationship has weakened markedly since 2020, according to an analysis (link) by Yu-Chi Wang, a graduate researcher, and Joe Janzen, an agricultural economist, published in farmdoc daily by the University of Illinois’ Department of Agricultural and Consumer Economics.
Drawing on monthly World Bank benchmark prices and daily futures data from U.S. and Malaysian exchanges, the authors show that price co-movement between the two oils has become more volatile and prone to long-lasting divergences. Soybean oil now frequently trades at large premiums — and occasionally discounts — to palm oil, a pattern rarely seen before 2020.
The article attributes this shift to a change in the types of shocks driving vegetable oil markets. Broad global forces — such as energy price spikes or worldwide supply tightness — still matter, but they increasingly interact with region-specific and policy-driven disruptions. In particular, U.S. biofuels policy has become a dominant influence on soybean oil prices, while palm oil prices are more affected by Southeast Asian production constraints, labor shortages, weather events, and export policies.
The authors highlight three recent episodes that illustrate the new dynamics. In 2021, rapid expansion of U.S. renewable diesel capacity sharply boosted soybean oil demand, pushing its price far above palm oil even as both markets tightened. In 2022, Indonesia’s temporary palm oil export ban and the Russia-Ukraine war created extreme volatility, followed by a reversal after U.S. regulators proposed lower-than-expected biofuel mandates. A third divergence in 2023–24 reflected U.S. drought concerns and then a collapse in renewable fuel credit values, which reduced the willingness of fuel producers to pay high prices for soybean oil.
Structurally, the authors argue, palm oil’s influence on global prices has diminished as plantation expansion in Indonesia and Malaysia slows and more output is absorbed by domestic biodiesel and food demand. At the same time, soybean oil has become increasingly tied to U.S. renewable fuels incentives and regulatory decisions, making its price more sensitive to domestic policy shifts than to global vegetable oil balances.
The bottom line, Wang and Janzen conclude, is that there is no longer a single, unified global vegetable oil price signal. Farmers, crushers, fuel producers, and policymakers must now monitor a wider set of moving parts — from U.S. biofuel mandates and credit markets to Southeast Asian weather and export rules — when assessing soybean oil prices and managing risk in an increasingly fragmented market.
— Soybeans lead as Brazil caps 2025 with double-digit grain export growth
ANEC data show corn surging late in the year while wheat slips, underscoring Brazil’s expanding grip on global grain trade
Brazil is set to close 2025 with sharply higher exports of its major grains, led by a strong rebound in soybeans and a late-year surge in corn shipments. According to a weekly report from National Association of Cereal Exporters (ANEC), prepared with logistics firm Cargonave using shipment schedules, exports of soybeans, soybean meal, corn and wheat are projected at 176.3–177.1 million tonnes, roughly 10% above 2024’s 160.6 million tonnes.
Soybeans dominate the gains. Exports are forecast at 109.2 million tonnes in 2025, up from 97.3 million tonnes last year. Soybean meal also edges higher, rising to 23.30 million tonnes from 22.84 million tonnes. Corn shows a more pronounced year-end lift, with exports expected at 41.46–42.30 million tonnes, compared with 37.83 million tonnes in 2024. Wheat is the lone decliner, slipping to 2.32 million tonnes from 2.58 million tonnes.
Late-December momentum favors corn. In the penultimate week of the year, corn shipments are projected at 1.67 million tonnes, up from 1.23 million tonnes the prior week. Over the same span, soybean loadings ease to 647,773 tonnes from 777,158 tonnes, while soybean meal increases to 484,782 tonnes. Wheat shipments fall sharply to 90,695 tonnes.
Ports tell the story. Santos leads weekly movements, with about 802,000 tonnes of corn and 340,000 tonnes of soybeans scheduled. Paranaguá remains a key hub for soybeans and derivatives, while northern arc ports—Barcarena, Santarém, and São Luís/Itaqui—handle significant corn volumes, highlighting Brazil’s diversified export corridors.
December still fluid. While shipment schedules point to 6.74 million tonnes of corn for the month, ANEC cautions that December could finish lower, estimating a range of 5.9–6.74 million tonnes (with an internal reference average near 6.32 million tonnes).
Year-to-date growth holds. From January through November, soybean exports rise to 105.71 million tonnes from 95.83 million a year earlier, and corn increases to 35.56 million tonnes from 34.21 million. Soybean meal posts a modest gain, while wheat continues to trail last year’s pace.
Bottom Line: Brazil’s 2025 grain export performance underscores its expanding role in global feed and oilseed markets — powered by soybeans and increasingly supported by corn — despite pockets of late-year variability and a softer wheat showing.
— Agriculture markets yesterday:
| Commodity | Contract Month | Closing Price Dec. 29 | Change vs Dec. 26 |
| Corn | March | $4.42 1/4 | -7 3/4¢ |
| Soybeans | March | $10.63 1/2 | -9¢ |
| Soybean Meal | March | $303.30 | -$4.10 |
| Soybean Oil | March | 49.29¢ | +7 pts |
| SRW Wheat | March | $5.13 | -6¢ |
| HRW Wheat | March | $5.27 1/4 | -6 1/4¢ |
| Spring Wheat | March | $5.79 1/4 | Unchanged |
| Cotton | March | 64.35¢ | -14 pts |
| Live Cattle | February | $228.975 | -67 1/2¢ |
| Feeder Cattle | January | $347.00 | +82 1/2¢ |
| Lean Hogs | February | $84.475 | -5¢ |
| FARM POLICY |
— USDA clears final rule to implement OBBBA farm program changes
OMB review complete, paving the way for updated ARC, PLC, and Dairy Margin Coverage rules to take effect for 2025 and 2026
USDA is poised to formally implement major farm program changes enacted under the One Big Beautiful Bill Act (OBBBA) after the White House Office of Management and Budget completed its review of a key final rule.
According to agency timelines, Office of Management and Budget wrapped up its review on Dec. 29 of USDA’s final rule titled Changes to Agriculture Risk Coverage, Price Loss Coverage, and Dairy Margin Coverage Programs. USDA had transmitted the rule to OMB on Dec. 5, starting the clock on the final regulatory clearance process.
With OMB sign-off now complete, USDA is positioned to publish the final rule in the Federal Register, a step that will formally activate OBBBA-directed updates to core farm safety net programs.
USDA has already begun internal implementation planning. The department has advised county Farm Service Agency offices of an expected rollout timeline tied to both the 2025 and 2026 program years, signaling that producers should soon see concrete guidance on how the revised ARC, PLC, and Dairy Margin Coverage provisions will operate.
While USDA has not yet released full regulatory details, the completed OMB review strongly suggests the final rule will closely reflect statutory changes Congress adopted in OBBBA — ending months of uncertainty over when and how those provisions would be put into effect.
| FARM INPUTS |
— Precision spraying delivers input savings — and unexpected yield gains
John Deere’s camera guided See & Spray system shows growing acreage, sharp herbicide reductions, and early evidence of soybean yield upside
Farmers across North America are rapidly expanding the use of camera-based, targeted spraying systems, and John Deere’s See & Spray technology posted another breakout year in 2025 — delivering both substantial input savings and emerging yield benefits.
According to comments from John Deere’s Josh Ladd in an interview with Oklahoma Farm Report, more than 1,000 See & Spray machines were operating across the continent this year, covering over 5 million acres — an area larger than the state of New Jersey. The rapid adoption reflects growers’ push to reduce costs, improve efficiency, and better manage weed pressure in increasingly volatile growing seasons.
Herbicide use cut nearly in half. Despite a wet spring that boosted weed pressure in many regions, Ladd said growers using See & Spray still achieved nearly 50% reductions in herbicide use. In aggregate, that translated into roughly 30 million gallons of herbicide mix that were not applied during the 2025 season.
Ladd emphasized that the value proposition extends well beyond chemical savings. Many early adopters, he said, are taking the dollars saved on inputs and reinvesting them into more sophisticated weed-management strategies, including programs aimed at slowing herbicide resistance and reducing long-term weed seed banks.
Yield benefits begin to emerge. Perhaps the most notable development in 2025 is evidence that precision spraying may be delivering measurable yield gains, particularly in soybeans. By limiting unnecessary crop exposure to herbicides, Ladd said John Deere observed average soybean yield increases of about 2 bushels per acre, with results reaching as high as 4.8 bushels per acre in some cases. “These are real-time results we’re seeing this year,” Ladd said, noting that reduced chemical stress on the crop is now translating into tangible performance improvements at harvest.
A broader shift in crop management. The combination of large-scale acreage adoption, significant chemical savings, and early yield upside underscores a broader shift toward data-driven, site-specific crop management. For growers facing high input costs, herbicide-resistance challenges, and tighter margins, technologies like See & Spray are increasingly viewed not just as cost-cutting tools — but as systems that can reshape agronomic strategy and profitability.
| ENERGY MARKETS & POLICY |
— Tuesday: Oil prices steady as geopolitical risks offset oversupply concerns
Markets recalibrate expectations on Ukraine peace talks while Middle East tensions and supply disruptions lend support
Oil prices were little changed Tuesday as traders weighed fading hopes for a near-term Russia/Ukraine peace deal against rising geopolitical tensions in the Middle East and persistent concerns about a global supply glut.
Brent crude futures for February delivery edged up 24 cents, 0.4%, to $62.18 a barrel by mid-day in London, while the more active March Brent contract gained 26 cents to $61.75. U.S. West Texas Intermediate rose 26 cents, 0.45%, to $58.34.
The market followed a more than 2% rally in the prior session after Saudi Arabia launched airstrikes in Yemen and Moscow accused Kyiv of targeting a Russian presidential residence — an allegation Ukraine rejected. The episode dampened optimism that peace talks between Russia and Ukraine would yield a breakthrough any time soon.
Additional support came from supply-side issues, including the ongoing U.S. blockade of Venezuelan oil and the suspension of Caspian CPC Blend exports due to poor weather. Tensions in the Middle East also intensified after Saudi Arabia carried out strikes in Yemen, citing concerns over foreign military support for UAE-backed southern separatists. Riyadh later warned that its national security was a “red line” and called for United Arab Emirates forces to leave Yemen within 24 hours, a move the UAE said it found disappointing and surprising.
Markets were also alert to broader regional risks after President Donald Trump said Washington could support another major strike on Iran if Tehran resumed rebuilding ballistic missile or nuclear weapons programs.
Still, analysts cautioned that structural oversupply could limit further upside.
— Monday: Oil prices jump as geopolitical risk premium returns
Russia/Ukraine tensions and renewed Middle East instability lift crude despite lingering supply surplus concerns
Oil prices rose more than $1 a barrel on Monday as markets repriced near-term geopolitical risks tied to Eastern Europe and the Middle East, offsetting longer-term concerns about global oversupply.
Brent crude settled up $1.30, 2.1%, at $61.94 a barrel, while U.S. West Texas Intermediate gained $1.34, 2.4%, to $58.08.
The rally followed accusations by Vladimir Putin that Ukraine carried out a drone attack near his residence — an allegation Kyiv denied. The claim injected fresh uncertainty into the Russia/Ukraine peace process after recent optimism that negotiations were advancing. Analysts said any stalling or reversal in talks could sustain a higher geopolitical risk premium in crude markets.
Attention also turned to the Middle East, where renewed instability in Yemen raised concerns about potential supply disruptions. Airstrikes by Saudi Arabia targeting separatist forces heightened unease in a region already sensitive to shipping and production risks, even though no oil infrastructure has been directly affected.
Fundamentals provided additional support. Strong Chinese seaborne crude imports are helping absorb excess supply, reinforcing views among some traders that $60 a barrel for Brent represents a near-term floor. Others noted expectations that non-OPEC+ supply growth could begin to slow by mid-2026.
Markets also remained cautious ahead of delayed U.S. inventory data for the week ended Dec. 19. Early estimates point to a draw in crude stocks alongside builds in gasoline and distillate inventories — data that could influence short-term price direction but, for now, has not outweighed the geopolitical drivers lifting prices.
| CHINA |
— Beijing signals stronger state hand in farm policy as new five-year plan nears
Xi sets grain targets, price support priorities, and reserve expansion ahead of 2026 plan launch
China’s leadership is doubling down on agriculture as a strategic pillar of economic and social stability, with Xi Jinping urging continued momentum on “rural revitalization” at this week’s annual Central Rural Work Conference in Beijing.
According to a recap by Xinhua News Agency, Xi emphasized the need to safeguard grain production, strengthen agricultural policy support, and ensure stable income growth for farmers. He framed agriculture as a “major modernized sector,” tying rural prosperity directly to broader living-standard goals and long-term economic security.
A key focus of the meeting was the outlook for 2026, the first year of China’s 15th Five-Year Plan. Xi said the country aims to lift grain output by 50 million metric tons (MMT) over the plan period, accelerate improvements in crop varieties, and strictly protect farmland levels above a designated “red line” to prevent excessive conversion to non-agricultural uses.
The conference also highlighted the scale of state involvement in grain markets. China purchased 415 MMT of grain in 2025, with officials noting that more than 90% of those purchases were market driven. However, the government still intervened selectively: about 22.5 MMT of wheat and rice were bought under minimum purchase price programs designed to stabilize market expectations during periods of price weakness.
Production data underscore why Beijing is pressing ahead with these measures. China’s 2025 grain output reached 714.88 MMT, up 1.2% from 2024, according to the National Bureau of Statistics. While the increase was modest, it reinforced official confidence that incremental gains — paired with policy support — can sustain food security amid rising costs and climate pressures.
Looking ahead, Liu Huanxin, head of the National Food and Strategic Reserves Administration, said China will further expand grain purchases and reserves under the new five-year plan, while continuing efforts to keep prices of key agricultural products at “reasonable levels.”
Taken together, the messaging points to a familiar but intensifying strategy: heavier reliance on reserves, targeted price supports, and land-use controls to insulate China’s farm sector from volatility — while ensuring that rural incomes keep pace with the country’s broader modernization push.
| TRANSPORTATION & LOGISTICS |
— Rail giants pitch coast-to-coast merger as antidote to trucking dominance
Union Pacific and Norfolk Southern argue their proposed tie-up would reclaim freight share, boost competition, and deliver billions in efficiencies
Union Pacific and Norfolk Southern are pressing federal regulators to approve a landmark merger that would create a transcontinental rail network, framing the deal as a way to claw back freight traffic lost to trucking and revive a stagnating rail sector.
In a sweeping application filed with the Surface Transportation Board (STB), the companies argue the merger would shift roughly two million truckloads per year to rail, easing congestion, cutting emissions, and improving highway safety, according to Barron’s.
The railroads say trucking has steadily eaten into rail’s position over the past decade. Norfolk Southern CEO Mark George told investors that freight railroads have lost 10 percentage points of market share to trucks, with trucking now controlling as much as 90% of freight movement in the Mississippi watershed, particularly along the Chicago-to-New Orleans corridor. The companies contend that fragmented rail handoffs between eastern and western networks have made rail uncompetitive for long-haul freight — an inefficiency the merger aims to eliminate.
By combining Union Pacific’s western network with Norfolk Southern’s eastern system, executives say shippers could access seamless, end-to-end service that rivals trucking on speed and reliability. Union Pacific CEO Jim Vena emphasized that the merged railroad would preserve existing rail yards and protect current jobs, a key consideration for regulators and labor groups.
Financially, the companies project substantial gains. The merger is expected to generate $2 billion in additional annual revenue from volume growth, $1 billion in operating cost savings, and $130 million per year in reduced capital spending. Notably, the regulatory filing assumes regulators will not require major divestments — allowing the companies to capture the full projected $2 billion in annual cash-flow gains by the third year after closing, a more optimistic outlook than initially presented when the deal was announced in July.
The proposal now sits with the Surface Transportation Board, which has up to a month to rule on whether the application is complete and as long as a year to weigh public comments from shippers, competitors, labor groups, and federal agencies including antitrust enforcers. For an industry searching for renewed growth after years of flat freight volumes and lagging stock performance, the Union Pacific/Norfolk Southern merger represents rail’s most ambitious bid yet to challenge trucking’s dominance, as reported by Barron’s.
| WEATHER |
— NWS outlook: Heavy lake-effect snow expected to linger across the Great Lakes as a big cyclone pivots away into eastern Canada… …Arctic air will dominate the eastern two-thirds of the country including Florida followed by a quick warm-up across the Northern and Central Plains amid a mild and tranquil Intermountain West… …Rain associated with an anomalous low pressure system from the tropical latitudes is forecast to bring the threat of flash flooding for southern California on New Year’s Eve into New Year’s Day.
