The start of a new year always brings change as markets kick back to life after holiday lulls. Even though electronic fund transfers mean fewer checks to remember to write with a 2026 date, January this year brings more than the usual number of adjustments as the flow of data finally becomes current after delays caused by the government shutdown in October.
Much of the uncertainty comes from trying to predict any surprises USDA’s big Jan. 12 data dump might hold. With so many numbers around the world in play, the question is not so much whether there will be surprises, but which reports – Grain Stocks, Crop Production or World Supply and Demand Estimates – will drop them. And the lapse in data collection means questions about whether any new numbers will be remotely compatible with historical time series.
Just as uncertain is whether traders will focus on agriculture or instead place bets according to swings from financial markets and global headline news. Latin America, the Middle East, Ukraine – throw a dart at a map and it could land on the next trouble spot to consider while wondering how the Jan. 9 U.S. Employment Situation could impact monetary police when the Federal Reserve weighs in at the end of the month. Here’s which hammers could fall in this market whack-a-mole.
Exporters grab corn
Nearby corn after Christmas rallied to the top of its trading range for the last six months, before dropping back 16 cents to start 2026. My models suggest average cash prices received by farmers could swing more than 20 cents depending on which way USDA reports break, deciding whether nearby futures rally to start with a $5 handle or break below $4.
The size of the U.S crop is one unknown, along with demand from livestock feeders, ethanol plants and exporters. Stocks of the biofuel are tightening, despite production nearly 3% higher year-on-year, a sign of good demand as weaker crude oil prices trigger more blending thanks to less pain at the pump. Of course, if gas gets too cheap it could make ethanol mixing unprofitable. That’s a falling knife energy companies don’t want to catch.
Exporters, whose commitments are at record levels through the end of December, are ransacking the corn shelf. Dec. 1 stocks data should clarify how much grain is walking off the farm, the final piece of the demand puzzle.
South America holds grain cards
Whether demand holds up could depend on what happens to output from South America, especially the second crop now being planted in Brazil. But before those combines roll, attention will focus on soybeans. Traders still anticipate record Brazilian production thanks to expansion, but dry weather creates additional uncertainty. Vegetation Health Index maps show Brazil crop conditions slipping, pointing to potential for a 2% reduction in yields.
That could be enough to make a difference – if China keeps buying according to its updated deal with the U.S. Politics aren’t the only issue as Beijing prepares for Lunar New Year holidays in mid-February. Soybean futures in China surged to six-month highs at the end of 2025, driven in part by hog inventory rebuilding after the country’s struggling economy depressed prices.
Chinese state buyers picked up their pace in December, but year-to-date commitments are still down 45% – a big hole to climb out of. Other countries aren’t picking up the slack. Total sales and shipments are the lowest in the 15 years since the 2012 U.S. drought reduced both production and sales. Weaker total exports of 2025 crop soybeans could knock almost a dollar a bushel off the $10.50 average cash price estimate forecast by USDA in December.
Ag fundamentals fall by the wayside
Financial markets could continue to provide turbulence, forcing traders to throw ag fundamentals of supply and demand out with their Christmas trees. Hopes for improved corporate earnings from artificial intelligence buoyed holiday markets some days, while the theme other days was interest rates.
Reports on jobs and unemployment from the Labor Department painted a mixed picture in December, one reason a divided Federal Reserve signaled a pause could follow the quarter of 1% reduction made at the last meeting. The market expects two and perhaps three more cuts over the next year, when the central bank will also get a new chairman.
Lower rates cut costs for farmers and other businesses but could also signal storm warnings to look out for a recession. Bulls and bears wrestled over the outlook, but the ability of the stock market to post new all-time highs kept the overall mood on Wall Street merry and bright, at least mostly.
The Trump Administration’s mantra is “never a dull moment,” as demonstrated by New Year’s events in Venezuela. So be prepared for the next big story to hit the wires, even if predicting the headlines is impossible before the fact.
