As of February 26th, the United States had 39.57 million metric tons of unshipped grain and soybean sales on the books. This was an 18 percent increase from last year and credited to the demand we have seen for corn and wheat. Sales of these grains are well ahead of last year and will likely remain active as our leading competitors in the global market are seeing production issues. There are concerns the U.S. is front loaded in its grain demand, but the volume we are shipping shows the market remains current. Soybean demand is down on the year due to the delayed start to China’s imports, but even this has built in recent weeks. China now has 4 mmt of unshipped soybean purchases with 7 mmt already shipped.

Concerns are building in the market that the current futures rally will cut commodity demand, especially with transportation costs skyrocketing. Rising costs have been absorbed by most of the interior market, especially ethanol grind and soybean crush. Margins on both have rallied to last summer’s highs with support coming from the energy market rally. This rise in grain values has not been welcomed by the livestock industry, as high feed grain costs are causing further stress on already razor thin margins.

Rising grain values are already starting to impact global food costs. Data from the United Nations’ Food and Ag Organization shows global food costs in the month of February climbed to their highest levels in five months. This gain was led by vegetable oils and meats, but cereals and grains added to higher costs.

The U.S.’s Energy Information Administration has released its 2026 and 2027 ethanol supply and demand outlooks. The EIA is predicting daily ethanol production of 1.08 million barrels per day for each year, up slightly from 2025’s average of 1.07 million. Blender demand is expected to average 930,000 barrels a day for both 2026 and 2027, equal to the 2025 volume. This leaves very little ethanol for export, and this has been a growing source of demand recently.

China’s soybean deliveries to start 2026 are on the low side. China has taken in 12.55 million metric tons of soybeans this year, a 7.8 percent decline from a year ago. Weather disruptions and a slow start to the Brazil soybean harvest are two of the primary causes of slow unloadings. China is also rotating its domestic soybean reserves, which will eventually be filled with U.S. imports. March soybean imports are expected to be much higher, coming in at 6.5 mmt compared to just 3.5 mmt last year.

What is more interesting in China is the current corn situation. Corn demand continues to rise in China, but many suppliers claim to be out of inventory. This has turned corn buyers to government auctions which have been seeing solid demand, even at elevated values. Recent auctions have seen 98 percent of corn sold. Sources in China claim that quality issues are causing an even more limited supply in stocks.

The quality of China’s grain crop has been questioned for several weeks, and this does not look like it will subside anytime soon. There are now concerns over the growing conditions of this year’s wheat crop in China as heavy rains and warmer temperatures are already causing disease worries. This situation is being amplified by a late planting season that did not allow for proper crop development before these conditions set in. These weather conditions are also elevating the odds of insect pressure in China’s wheat crop. These worries are being verified by ongoing auction results with buyers taking 100 percent of offers.

The February Consumer Price Index report showed mixed numbers. Total inflation from January to February held steady at 2.4 percent for total inflation and 2.5 percent on core inflation. Core inflation excludes energy and food costs. Total inflation in February crept up 0.3 percent, just above the 0.2 percent increase in January. Core inflation was 0.2 percent in February, just below the 0.3 percent in January. The standout number was on energy, which was up 0.6 percent in February after falling 1.5 percent in January. Food costs were also up 0.4 percent in February, twice the increase from the month before. Even higher costs are predicted for March.

Cargill has suspended soybean export sales from Brazil to China. Cargill has also suspended its purchases of soybeans from farmers in Brazil as the country’s entire soybean trade with China is becoming less certain. Stricter sanitary requirements on soybean exports from Brazil are being requested, tightening them to a point where trade would be risky from a delivery point of view. It is currently unclear if China asked for these tighter regulations, or if Brazil did itself. The entire development stems from Brazil placing anti-dumping charges on Chinese steel. This development is likely to bring the U.S. at least some additional export demand, especially if other firms join in.

The U.S. Climate Prediction Center has released its La Nina forecast, and claims there is now a 55 percent chance the event will transition to an El Nino influenced pattern through July. The CPC also states there is a 62 percent chance the El Nino will remain in place through the end of 2026. History indicates that El Nino patterns tend to elevate U.S. corn and soybean yields as they bring cooler and wetter growing seasons to the Midwest. In a strong El Nino year, U.S. yields can increase up to 9 percent.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is collected from a variety of sources and is believed to be reliable but is not guaranteed to be accurate. This report is provided for informational purposes only and is not furnished for the purpose of, nor is it intended to be relied upon for specific trading in commodities herein named.