AM Market Report – February 4, 2026
GOOD MORNING…HERE IS YOUR MORNING MARKET NEWS
OVERNIGHT GRAIN TRADE
ICE canola futures are trading around $4/tonne higher to start this morning…still riding a price-friendly wave following some encouraging US biofuel policy announcements yesterday on the 45Z tax credit. See more in separate story below.
US grain markets are generally a little weaker this morning. Chicago soybean futures are edging 1 to 2 cents/bu lower, with soymeal soft, while soyoil is slightly stronger.
CBOT corn futures are down 1 to 2 cents this morning.
US wheat markets are down again…a penny or less lower for spring wheat futures, while the winter wheats are losing 2 to 4 cents.
Grain market bulls are fading, save for soyoil, in the aftermath of strong US corn and soybean December crush usage and a US trade deal with India offering potential US soyoil exports…though I m not so sure about that. The Treasury Department moved US biofuel policy forward yesterday, announcing proposed rules for a 45Z tax credit. But it seems the bulls need more fresh fundamental sparks. Some dry pockets in Brazil and Argentine corn and soybean regions are so far not moving the needle on futures prices.
In Other News
– US biofuel industry welcomes 45Z tax credit proposal, awaits final details… New US government guidance on the 45Z biofuel tax credit will limit eligible feedstocks to the US, Canada, and Mexico, a development that could have significant implications for North American biofuel markets and Canadian oilseed producers. The US Department of the Treasury and the Internal Revenue Service on Tuesday released proposed regulations outlining how domestic producers can qualify for and calculate the clean fuel production credit, commonly known as the 45Z credit.
The immediate quick-take reaction to the proposed rule is that it is fundamentally supportive for US soyoil and Canadian canola demand by the US biofuels sector. But upon first glance at the rule, it did not include anything “newly bullish” relative to discussions in the market in recent months…though soyoil and canola futures rallied initially on the news Tuesday morning…though gains faded a bit through the session.
Good news is the rule does limit 45Z tax credits to North American-produced feedstocks only…which includes Canadian canola…and the indirect land use (ILUC) penalty on ag feedstocks has been eliminated (also good for canola and soy), while increasing potential tax credits for vegoils. But both of these issues had already been expected by the market in our opinion.
Additionally, the bio/renewable diesel blender credit has been replaced as a production credit, which was expected, as well.
On the other hand, significant US biofuels-related policy uncertainty remains as Renewable Volume Obligations (RVO) for 2026 and 2027 have yet to be officially set by the US Environmental Protection Agency, and the ultimate handling of small refinery exemptions (SREs) remains in debate, as well. We are hearing that the RVO and the reallocation of SRE’s which are under review and are finalized with an announcement to be made on March 31st.
And there are still unanswered questions, including how the guidance will be integrated with the new GREET Model, a big calculator used to figure out how good a fuel is for the environment.
Public comments are being taken on the US Treasury Department s guidance for 60 days, once it s published in the Federal Register, and a public hearing is scheduled for May 28. Final guidance is expected to be issued by summer.
– Bunge forecasts 2026 profit below estimates on macroeconomic uncertainty… Bunge has forecast current-year adjusted profit below analysts’ expectations, as volatile commodity markets and tighter margins hurt the global grain trader. A slump in grain prices, weak crop-processing margins and geopolitical tensions have eroded profitability in the sector, affecting Bunge and peers such as ADM and Cargill. Bunge executives had flagged in November last year that uncertainty over trade and biofuels policy will be a drag on fourth-quarter earnings as farmers selling crops to the company and customers buying its products have been reluctant to book deals beyond the near-term.
The Trump administration plans to finalize 2026 biofuel blending quotas by early March. The quotas were originally expected in late October 2025. Without clarity on quotas, companies said they were forced to hold back on deals and spending decisions that shape output and margins. Rival grain trader ADM, whose operations are more concentrated in the US, forecast 2026 adjusted profit below analysts’ expectations on Tuesday due to the deferral of US biofuel policy.
– Former US agriculture officials, top Republican senator warn of farm country trouble… The chair of the US Senate’s agriculture committee warned on Tuesday that American farmers were suffering heavy losses, while more than two dozen former industry leaders sounded the alarm about the risk of a “widespread collapse of American agriculture” ahead of a $12 billion US government bailout expected to reach growers this month.
For three years, the costs of seed, fertilizer and other farm inputs rose, while plentiful grain supplies limited profits for farmers, economists said. Then, President Donald Trump returned to office last year, sparking trade disputes that disrupted US crop exports and immigration crackdowns that increased labor costs and left some farms with crops rotting in fields.
Many farmers are now bracing to potentially lose money for a fourth consecutive year. Tough credit conditions are forcing those with limited cash flows to make decisions about what acres to plant and how much fertilizer to buy, economists said.
– Brazil soy crop production raised… StoneX Brazil this month raised its 2025/26 soybean production estimate by another 4 MMT to a massive record 181.6 MMT. Solid year over year increases in both planted acreage and yield now have the crop up almost 13 MMT from last season’s previous record crop, and more than doubled in just the last dozen years. 2025/26 total Brazilian corn output was up 1 MMT this month to 135.5 MMT, around 4 MMT off record highs from last year and 2022/23, though that number is more than double what it was just 10 years ago as well.
– China’s pushes grain security, agri-tech innovation… China will stabilize grain and oilseed output, diversify agricultural imports and increase support for farmers, state media reported on Tuesday, citing a government rural policy blueprint aimed at ensuring food security. The State Council’s “No. 1 document” comes as China prepares its next five-year plan amid trade friction with major food suppliers such as the US and Canada, alongside a domestic economic slowdown and climate challenges. Although China recorded record grain output last year, it remains heavily reliant on imports. Trade tensions, particularly with the US, have accelerated efforts towards self-sufficiency, including investments in machinery and seed technology.
The No. 1 document mentions diversification three times, up from once in 2025, highlighting plans to expand oilseed supplies, diversify the food system, and broaden agricultural imports. China’s push to diversify ag imports could cut reliance on traditional exporters and expand trade with the Global South, said Even Rogers Pay, director at Beijing-based consultancy Trivium China. “(The increased emphasis on diversification) tells us central policymakers increasingly view diversification as a strategy to make China’s food system more secure, and more resilient when shocks like natural disasters or trade wars occur,” Pay said.
On soybeans, the plan shifts from consolidating expansion gains in 2025 to consolidating and enhancing production capacity, signalling a greater focus on yield and quality rather than planting area, she said. Beijing has been cutting reliance on US soybeans since the first Trump trade war, while boosting domestic production to bolster food security. US soybean market share in China fell to 15% in 2025, down from 41% in 2016.
– India to keep some farm protections in US trade deal… India will grant the United States some limited access to its market for agricultural products but maintain key protections, officials from the two countries say as the outlines of a tariff-reducing trade deal between US President Donald Trump and Indian President Narendra Modi started to emerge. India will reduce tariffs on US industrial goods to zero from about 13.5% and eliminate duties on US tree nuts, fruits, vegetables, wine and spirits. But India will keep in place some protections on “key areas” of its politically important farm sector. In exchange, the US will reduce its tariffs on Indian goods to 18% from 50%.
The agreement comes after months of tensions between Trump and Modi that began to ease in recent weeks, and follows a big trade agreement signed by Modi with the European Union last month. Trump needed an economic and foreign policy win on the trade front amid domestic political turmoil at home.
An Indian government official told Reuters on Tuesday that India would gradually ramp up purchases of US petroleum, aircraft, defense and telecom goods and pharmaceuticals as part of the deal, which includes a multi-year commitment to buy $500 billion in American goods. “It will be done over the years,” the official said, adding that a more comprehensive pact between the world’s two largest democracies would be negotiated over the coming months.
The deal also calls for India to halt its purchases of Russian oil in exchange for lowering US tariffs on Indian goods and eliminating a 25% punitive duty related to Russian oil that Trump imposed last August.
– New Product of the USA label coming… The president of the US National Cattlemen s Beef Association says the new Product of the USA label is one that works for US producers. Gene Copenhaver says the updated label requires that products will be born, raised, and harvested in the United States. He says the previous labeling system was misleading. It was really not always a product of the USA, he says. If it was processed in a USDA facility, then they could put the Product of the USA stamp on it.
Under the new rule, if the product is labeled Product of the USA records are required to show where the animals were born, raised, slaughtered, and processed.
The new rule is voluntary, which keeps the rule WTO compliant.
Copenhaver says it s important to protect the trade relationships with Canada and Mexico. Not only with beef, with all ag products, he says.
– Seeking shelter from Trump s fury, US trade partners reach deals with each other… Bullied and buffeted by US President Donald Trump s tariffs for the past year, America s longstanding allies are desperately seeking ways to shield themselves from the president s impulsive wrath, according to an Associated Press report.
US trade partners are cutting deals among themselves…sometimes discarding old differences to do so…in a push to diversify their economies away from a newly protectionist United States. Central banks and global investors are dumping US dollars and buying gold. Together, their actions could diminish US influence and mean higher interest rates and prices for Americans already angry about the high cost of living.
Last summer and fall, Trump used the threat of punishing taxes on imports to strong-arm the European Union, Japan, South Korea and other trading partners into accepting lopsided trade deals and promising to make massive investments in the United States. But a deal with Trump, they ve discovered, is no deal at all.
Outside Markets
The Dow Jones Industrial Average fell 166.67 points lower to end Tuesday at 49,240.99, while the S&P 500 declined 58.63 points to 6,917.81. Early Wednesday, the March Dow Jones Futures are up 65 points.
Global stock markets are leaning mixed to slightly higher this morning, though a sell-off in global software stocks entered a second day, reflecting growing concerns about how AI advances might impact these companies livelihoods.
Fears artificial-intelligence will steal business from software companies sparked a stock-market pullback Tuesday. Big losses for big-name software companies dragged the tech-heavy Nasdaq down by 1.4% while the S&P 500 and Dow Jones Industrial Average also ended lower. The focus was on an announcement by AI firm Anthropic, which said it was adding new legal tools to its Cowork assistant that would help automate legal drafting and research tasks. Software companies that serve the legal field were hard hit, with shares of Thomson Reuters falling 15% and LegalZoom dropping nearly 20%, while business development companies (BDCs) that have funded a slew of start-ups in that sector also saw steep losses.
The pattern should be familiar by now: An apparent breakthrough occurs in AI that promises to upend traditional industries, and the market panics, driving down share prices in legacy companies.
Wall Street futures are mixed this morning…Dow and S&P 500 indexes are slightly higher, while the tech heavy Nasdaq again lower…after major US markets closed down yesterday. Canada s TSX stock index futures are in positive territory this morning as commodity prices climbed…adding to the 205 point gain posted yesterday.
The March US Dollar Index is up 0.119 at 97.420. The Canadian dollar weakened against its US counterpart…currently quoted at 73.24 US cents.
Mar crude oil futures are up $0.01 at US $63.22/barrel. Oil prices are steady to edging slightly higher this morning, extending gains after the US shot down an Iranian drone and armed Iranian boats approached a US-flagged vessel in the Strait of Hormuz, rekindling fears of an escalation in tensions between Washington and Tehran. Uncertainty about how US-Iran talks will play out means the ?market will likely continue to price in some risk premium.
Grain Markets
Chicago soybean futures are trading generally 1 to 2 cents/bu lower this morning. Bean futures posted 4 to 5 cent gains on Tuesday. Soymeal futures are down $1 to $2/ton this morning after dipping $1 to $2/ton lower on Tuesday. Soyoil futures are up a modest 9 to 14 points this morning after rallying 102 to 129 points higher yesterday.
The big positive story yesterday was the US Treasury Dept issuing guidance on the 45Z tax credit, adding some premium to bean oil and lessening some uncertainty. They still need to go through a public hearing process, which is scheduled for May.
Brazil s record harvest is advancing, and dry parts of Argentina could see rain. Private estimates for Brazil s crop are rising as that harvest moves forward. A number of those updated estimates are now above 180 MMT. The Mato Grosso, Brazil, Institute of Agricultural Economics increased its yield outlook for the state by 7%, now assuming total production of 50.5 MMT. Mato Grosso, the largest soybean-producing state in the country, accounted for 28% of the nation’s crop over the last decade.
The trade is waiting to see if China still has any interest in US soybeans after hitting the 12 MMT target agreed to in the as of yet still unsigned US-China trade deal framework reached last year. Beijing has reportedly purchased a large amount of beans from Brazil after hitting that mark.
Chicago corn futures are 1 to 2 cents weaker this morning. The corn market ended 2 to 3 cents higher at Tuesday s close.
The US export price advantage is starting to slip, Argentina now has the lowest corn price starting in spring delivery, and sorghum is reportedly replacing corn in US ethanol in some areas due to the cost difference.
Traders are also monitoring rain chances in South America, along with first crop harvest and second crop planting in Brazil. The US Energy Information Administration s weekly ethanol numbers are out Wednesday.
The US Treasury Dept issued guidance on the 45Z tax credit on Tuesday morning, though they still need to go through a public hearing process, which is scheduled for May.
US wheat markets are weaker this morning… Minnie spring wheat futures are down less than a penny, while the winter wheats are losing 2 to 4 cents. The US wheat complex was mixed on Tuesday, with the hard red contracts feeling weakness…spring wheat down 3 to 4 cents in the front months at yesterday s close.
So far in February, the wheat market has slipped steadily from its two-month highs, weighed down by large global supplies. The USDA updates its state crop conditions report, perhaps shedding light on the U.S. winter wheat crop. Geopolitical tensions stay high in the Black Sea as Russia launched a large-scale attack on Ukraine’s energy infrastructure, putting at risk a meeting on Wednesday and Thursday between the US, Russia, and Ukraine.
CANADIAN GRAIN MARKET
ICE canola futures ended higher on Tuesday, with the nearby March contract once again settling at the key $650/tonne benchmark. Canola was supported by new US government guidance on the American 45Z biofuel tax credit. The proposals include limiting eligible feedstocks to the US, Canada, and Mexico, which should have positive implications for canola oil demand from the US.
Chicago soybeans and soyoil were also both higher on the new guidance, which further supported canola. Malaysian palm oil and European rapeseed futures also pushed higher on the day, with advances in crude oil underpinning the market as well.
On the other hand, the Canadian dollar was higher, which helped to limit canola s gains.
March canola finished up $4.30 at $649.30/tonne…still struggling to sustain a move above stubborn chart resistance at the $650 level. New-crop November futures gained $4.90 to $661.80.
For today… canola futures are advancing $4/tonne higher this morning. The nearby Mar contract is up $4.60 to $653.90/tonne right now…continuing a recent trend of starting the session above stubborn chart resistance early at $650/t, but unable to hold convincingly above that mark by the close. Is today the day?
Like yesterday, canola is drawing supported by new US 45Z biofuel tax credit guidance. The proposals include limiting eligible feedstocks to the US, Canada, and Mexico, which should have positive implications for canola oil demand from the US.
CBOT soyoil is slightly higher this morning after yesterday s rally, though soybeans are edging slightly lower. EU rapeseed, Malaysian palm oil and crude oil markets are all slightly higher.
Mustard prices holding steady
By Glen Hallick, MarketsFarm
Mustard markets in Western Canada are showing little movement this winter, said Norm Hall, board chair of the Saskatchewan Mustard Development Commission. Oriental (mustard) dropped a little bit in the last few days, less than 1%, said Hall, who farms near Wynyard, Sask. They re just moving around a little bit here and there, up a cent or down a cent per pound.
Yellow mustard tacked on one cent at 40 to 42 cents/lb. delivered. Oriental was up a penny as well at 46 to 47 cents/lb, while brown was down a penny at 31 to 35 cents.
Hall said Saskatchewan farmers are still dealing with a large harvest from 2024.
Statistics Canada placed mustard production for that year at 192,300 tonnes, followed by this year s crop of 139,800 tonnes. In Saskatchewan, mustard growers gleaned around 89,700 tonnes, down from 136,100 the previous year. Alberta is the only other province that produces enough reportable amounts of the oilseed.
The majority of Saskatchewan mustard is grown in the Palliser Triangle, Hall said. Depending on when (farmers) seeded…there were some rains that the later crops benefited from. They got some handsome yields. Then there were others who got virtually nothing.
Hall cited a private report that deemed this year s mustard crop to be average overall.
With StatCan production figures, the five-year average for the total mustard output is a little more than 137,000 tonnes and about 98,000 tonnes for Saskatchewan.
As spring approaches, Hall is hopeful that mustard prices climb higher as that should lead to more planted area.
In Agriculture Canada s January supply and demand estimates, its initial mustard projection for planted area was 432,000 acres in 2026 compared to 361,000 acres in 2025.
AgCan estimated next year s mustard exports to hold at 95,000 tonnes and domestic use to bump up to 54,000 tonnes. Ending stocks are to step back from 145,000 tonnes to a still burdensome 140,000.
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