Grain markets closed Tuesday with a cautious, defensive tone as participants continued to price in the implications of USDA’s sharply higher production and stocks from earlier in the week. While the pace of losses slowed versus Monday, the broader supply overhang kept rallies shallow and short-lived across the complex.

Corn drew renewed attention from the biofuel sector after the Renewable Fuels Association argued that the record U.S. corn crop underscores the need for expanded ethanol demand via year-round E15 sales. The headline reinforced longer-term demand potential, but futures struggled to respond as traders focused on near-term balance sheet pressure rather than policy outcomes.

Export demand was constructive but uneven in its price impact. Weekly inspections remained strong for corn, soybeans, and wheat, and USDA confirmed additional private soybean sales to China and Mexico during the session. Despite this, the market viewed shipments as incremental positives rather than a catalyst strong enough to offset larger ending stocks.

China-related headlines were active across multiple crops. Wheat imports from Australia and Argentina surged in December on competitive pricing, while Sinograin fully cleared another 1.1 MMT soybean auction to manage inventories ahead of U.S. arrivals. These moves confirmed underlying demand but did little to spark sustained price recovery amid ample global supply.

South American fundamentals leaned mixed to slightly bearish for soybeans and corn. Brazil’s soybean harvest advanced to 0.6% complete, ahead of last year’s pace, and export projections for January were raised, reinforcing expectations of strong near-term supply. Dryness concerns persist in parts of Brazil and Argentina, but forecasts include enough rainfall to prevent a significant weather premium from developing.

Vegetable oil markets remained a source of divergence. Soy oil rallied on biodiesel policy discussions in Indonesia and shifting import demand from India away from palm oil, while palm oil prices softened under the weight of elevated Malaysian inventories. The split performance continued to pressure soymeal and kept crush margins volatile.

Wheat found limited relative support from geopolitical risk after reports of Russian drone attacks on vessels carrying agricultural products near Ukrainian ports. However, higher Russian export forecasts and sluggish EU export performance capped upside, keeping wheat largely range-bound by the close.

Fund activity remained an underlying factor. Open interest data pointed to continued participation on the sell side in corn and soybeans, reinforcing the idea that funds are still adjusting exposure after the USDA reset rather than aggressively rebuilding length.

Wheat: Mar ’26 CBOT wheat closed at $5.10 1/2, down 3/4 cent. Chicago wheat was pressured by higher global stocks and stronger Russian export projections, while Black Sea security risks and steady export inspections helped limit losses.

Corn: Mar ’26 CBOT corn settled at $4.19 3/4, down 1 3/4 cents. Futures consolidated after Monday’s sharp drop, with ethanol policy headlines and South Korean tender activity offering support, but record U.S. production and elevated ending stocks continued to weigh.

Soybeans: Jan ’26 CBOT soybeans finished at $10.23 1/4, down 9 3/4 cents. Fresh export sales to China and Mexico and a fully subscribed Sinograin auction supported demand sentiment, but higher U.S. carryout, rising Brazilian exports, and weak soymeal values kept the complex under pressure.