February can bring plenty of price volatility to the grain complex. Government reports, trade deals, currency fluctuations and seasonal price action all weave together in a back-to-back timeline.
What’s happened
As January ended, corn, soybean and wheat prices were trading in a relatively lackluster range. Prices had been trading sideways to lower, still sorting out the aftermath of the very bearish USDA’s January WASDE report.
Soybean futures woke up during the first week of February and raced nearly 60 cents higher after a supportive social media post from President Trump suggesting China might soon buy an additional 8 million metric tons of U.S. soybeans. While it was welcomed news for the soy complex, corn and wheat futures did not follow the enthusiasm, with prices remaining trapped in their current trading ranges.
From a marketing perspective
So, what will the month of February bring? Here are five fundamental news items you need to monitor.
- WASDE and the USDA Outlook Forum. The first, and most important fundamental item to monitor is the February report and the USDA Outlook Forum. Traditionally the February WASDE report brings very little fresh fundamental news. We will see if that is the case this year.
- The U.S. dollar. The second fundamental to monitor is the value of the U.S. dollar. Over one year ago, in January 2025, the U.S. Dollar Index was trading near 110. It has trended lower ever since, now trading near 96.
- Geopolitics. The third item to watch is continued geopolitical tensions. Not only the ongoing war in Ukraine and Russia, but relations with China, and the potential legal ramifications ahead for U.S. tariffs.
- Seasonal tendencies. The fourth item on the watch list is to be aware of the seasonal tendencies for corn and soybeans during February. While past performance is not indicative of future results, historical data shows a strong tendency for a seasonal price pullback around the middle of the month.
Traders then shift focus to the USDA Outlook Forum pegged for Feb. 19 and 20 in Washington, D.C. An annual event, the forum is not an official report but more of an outlook opportunity to hear initial ideas of upcoming demand for U.S. grains in the coming year and the outlook for global supply.
USDA will throw out a preliminary acreage estimate for 2026, yet this is not an official number as the Prospective Plantings report drops March 31. Again, this is not an official USDA report. USDA offers guesstimates and guidance for acres, yield and demand for the upcoming crop year. Over the past decade, however, this event has grabbed the attention of traders and computer algorithms.
- The U.S. dollar. The second fundamental to monitor is the value of the U.S. dollar. Over one year ago, in January 2025, the U.S. Dollar Index was trading near 110. It has trended lower ever since, now trading near 96.
- Geopolitics. The third item to watch is continued geopolitical tensions. Not only the ongoing war in Ukraine and Russia, but relations with China, and the potential legal ramifications ahead for U.S. tariffs.
- Seasonal tendencies. The fourth item on the watch list is to be aware of the seasonal tendencies for corn and soybeans during February. While past performance is not indicative of future results, historical data shows a strong tendency for a seasonal price pullback around the middle of the month.
A lower U.S. dollar can help keep U.S. agricultural exports more competitive (due to currency exchange rates). All you need to remember is that when the value of the U.S. dollar is down, currency exchange rates make it cheaper for other countries to import our commodities. A lower dollar has a tendency to increase demand for corn, soybean and wheat exports.
- Geopolitics. The third item to watch is continued geopolitical tensions. Not only the ongoing war in Ukraine and Russia, but relations with China, and the potential legal ramifications ahead for U.S. tariffs.
- Seasonal tendencies. The fourth item on the watch list is to be aware of the seasonal tendencies for corn and soybeans during February. While past performance is not indicative of future results, historical data shows a strong tendency for a seasonal price pullback around the middle of the month.
President Trump suggested on social media in early February that China might step up current purchases of U.S. soybeans by nearly 8 million metric tons. If true, that deal would be a complete game changer on the demand side of the U.S. balance sheet, dramatically lowering U.S. ending stocks and ultimately leading to a last-minute competition for planted acres in the United States this spring. Will China buy those beans?
President Trump also hinted at an April visit to China to see President Xi. Will the trip actually occur? Or will there be a disagreement on trade or Taiwan prior to that meeting? One that would bring such a trip and future trade deals to a screeching halt?
Wrapping up the geo-political portion of this watch list, we still are waiting for a Supreme Court decision on whether tariffs are legal. The appeals court ruled in last fall that President Trump’s tariffs overstepped his presidential authority. The next potential Supreme Court ruling date is scheduled for Friday, Feb. 20. One implication of the Supreme Court ruling is that countries that may still negotiating the details of their trade deal, including China, are more likely to drag their feet with negotiations hoping the court will strike tariffs down. If the Supreme Court does rule against the president, countries that have been paying tariffs may ask for refunds.
- Seasonal tendencies. The fourth item on the watch list is to be aware of the seasonal tendencies for corn and soybeans during February. While past performance is not indicative of future results, historical data shows a strong tendency for a seasonal price pullback around the middle of the month.
- Fund traders. Lastly, we need to monitor the fund traders. Who are “the funds”? They are traders who represent the big investment money that trades in commodities. Fund managers watch and monitor grain market fundamentals and technical chart aspects for opportunities to invest and make money.
When they are long (buyers) in the grain market, prices tend to trade higher, and there are usually underlying friendly fundamental components supporting grain prices, too.
When funds are short (sellers) in the market, it is often due to grain supply and demand fundamentals that are shifting to bearish. Currently, they hold net short positions in corn and wheat.
The good news is that we can keep an eye on their actions. Every week, the government requires the funds to disclose the number of positions they bought or sold during the week. From there, we can track whether they are amassing a long or short position in the market. Of course, in a government shutdown we are unable to see a summarized weekly report, but it is possible to look at their daily activity, from which one can garner a potential trend.
Prepare yourself
The market will have multiple pieces of news to monitor in the coming weeks.
As they fall, which way will the pieces of news tip the price scale? Will prices rise higher due to China buying an additional 8 million metric tons of soybeans? Or might there be a friendly surprise coming out of USDA information or upcoming trade deals? Or will a snafu in global economics, trade negotiations or global geopolitics spook prices lower?
My advice: Make a strategy that allows your farm to be prepared for either scenario. Don’t wait and see. Be ready to act on opportunity.
Reach Naomi Blohm at 800-334-9779, on X: @naomiblohm, and at naomi@totalfarmmarketing.com.
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