In our first look at the WASDE report for 2026, it is best to first look back at the results that came out in early January. The January 12 report was a surprise to the corn and soybean markets on a couple of different fronts. For corn, the yield per acre, and therefore, production were both higher than expected. More concerning for bulls, however, was the ending stocks which came in considerably higher at 2.227B bushels. This increase in corn supply was the biggest driver of price moves that day. Similarly, in soybeans, yields, production and ending stocks were all higher than expected, putting downward pressure on a market that was finally recovering from some better demand numbers.

Turning to the next WASDE report on February 10, yield per acre and production are likely not a concern for the market. With the season over, these are typically not the focus in February. Any changes in ending stocks or in expected exports are likely to be the bigger components to drive changes in price that traders should be aware of. Ending stocks for corn and soybeans are 2.227B bushels and 350M bushels respectively, and expected exports are 3.200B bushels and 1.575B bushels in corn and soybeans respectively. How will the actual be different from these numbers? Traders need to take a look to estimate.

A big topic of conversation at the end of 2025 and into 2026 has been the demand for soybeans from China, the largest importer of soybeans in the world. With trade frictions for all of 2025, China had abstained from buying any soybeans throughout the year. With the negotiations in the fall of 2025, China agreed to buy 12 million metric tons of soybeans, but the market was skeptical of achieving this goal given initial estimates of purchases came in well below this number. As the Reuters article on top points out, China has now hit the targeted pledge amount of 12 million metric tons confirming this final demand number. What the article does not mention is that this 12 million metric tons number is well below historical purchase amounts and so the market is still unclear if on a go-forward basis, China will use the 12 million metric tons pledge as the new annual amount or if it will return to the amount it used to buy which is in the 26 – 27mm tons or double the amount of last year.

Enter Brazilian supply. The bottom article from Southern Ag Today points out that the USDA is currently projecting the Brazilian soybean crop to be a record 178 million metric tons up from 171.5 million metric tons last year. Not only is Brazil producing soybeans in record amounts, but it is doing so at a very low cost. It is expected to export 114 million metric tons, approximately the amount China imports, which is a number far larger than the 42.86 million metric tons the U.S. exports. In corn, however, the USDA is expecting a large crop in Brazil, but a crop that is down from last year’s numbers at 131 million metric tons, down about 2%. La Nina conditions are leading to lower yields in corn. Increasingly Brazil is becoming the major player in ag exports, but much more dominant in soybeans than corn.

These two charts show the expected relationship between ending stocks and futures price. As supply or ending stocks increases, futures move lower. As ending stocks decrease, futures move higher. Looking closely, one can perhaps see that it is in Q1 or January – March that there tend to be the largest moves in ending stocks that impact futures price. Over the rest of the year, it will be planting reports and then yield per acre and production that traders will focus on. Early in the calendar year, it is all about how much inventory is being cleared to make way for a new crop. This is also important because farmers sitting on silos full of one crop are more than likely to lean more heavily on the other crop when it comes time to plant. Thus, traders can start to glean how farmers may be thinking about the upcoming planting season, all else equal, based on what they hear about the ending stocks from the year before. This is, of course, also impacted by the demand for these products. Corn exports were a record in 2025, with Mexico the largest buyer, and thus the bias for traders will be that this number won’t be as large. With some clarity on China demand for U.S. soybeans, there again won’t be the expected growth in ending stocks. There is potential for surprise in either direction for both of these crops in the February report.

Price is the intersection of supply and demand. I have already discussed the potential supply from the largest harvest in the U.S. last year and the large, expected crops in Brazil this year. What about demand? The picture with China is murky and that is creating problems for farmers. The blue line shows the exports of U.S. soybeans over the last 10 years. You can see this number is tracking at the lowest level in over a decade. While domestic demand for soybean oil is helping absorb some of this loss in exports, the competitiveness of Brazilian soybeans is making life miserable for U.S. farmers. That is not the case for corn. The white line above shows corn exports over the last decade. In particular, I see massive growth over the last two years such that exports for corn have never been higher. Thus, it is a mixed picture of demand for U.S. farmers as traders enter the planting season. What will traders hear on expected exports from the WASDE report?

In order to assess how this intersection of supply and demand plays out in price, it is time to turn to the technical charts. The top chart looks at the daily Ichimoku cloud chart for generic front-month Corn prices. You can see the large downward candle at the last WASDE report date. Prices sold off to the bottom of the cloud and held at that support level. Potentially leading to this support was that the lagging span in red held at the top of the cloud and never breached it, showing there is strong underlying demand for Corn. Finally, the bottom panel of the Corn chart shows the MACD is crossing over and turning higher, indicating that the trend may be starting to turn up for Corn.

In contrast, I turn to the daily Ichimoku cloud chart for generic front-month Soybean prices in the bottom chart. One can see the bullish move in late October and through November on the back of the trade deal with China. Moving into December, however, there was some skepticism that China would fulfill that demand (which traders now know it did) and prices sold off, going below the cloud level. There was also a big downward candle on the January WASDE report day, but after that day, perhaps driven by the China report, prices have recovered leading to the MACD turning higher. As one can see, though, the Ichimoku cloud is presenting daunting resistance above current levels. In addition, the lagging span, which is inside the Ichimoku cloud, is approaching the top end of that cloud, another sign of potential resistance. While it is positive to see prices hold from the WASDE selloff, the overhead resistance may prove too much to contend with.

Now I pivot to the volatility markets to get a gauge of what options traders are thinking about both products. The top chart looks at the CVOL Index for both Corn and Soybeans over the past year. It is clear from this graph that the level of volatility is at the lows seen over the past year, particularly in the case of Corn. This doesn’t mean that levels couldn’t go lower, but it does suggest that the hurdle rate for volatility is as low as traders have seen over the last year meaning long gamma or long vega positions could be warranted. Assessing the relative demand for upside vs. downside options, one must look at the Skew Ratio which is in the bottom chart. The blue line points out that the Skew Ratio for Corn is near the highs seen over the past year, suggesting there is strong relative demand for upside options. Conversely, the relative demand for upside vs. downside options in Soybeans is much more neutral. There is small relative demand for upside, but this Skew Ratio level is very much at the mid-point of where it has been over the past year. Neither of these Skew Ratio levels give us a strong signal of what to do, at least not as strong as the low level of volatility overall that traders see in the top chart.

While the overall level of volatility is low, finding the right expiration in which to express one’s view is critical for success. For this I look at the term structure of implied volatility. There are top charts of this, with Corn implied volatility on top and Soybean implied volatility on the bottom. In each case, I see that volatility levels are elevated in the expirations just before and just after the February 10 WASDE report potentially suggesting positioning for this even among traders. In each case, though, I see that the expiration going out a bit more, about a week longer, yields a substantial discount in implied volatility, not only below the elevated level seen at the WASDE report, but also below that which one can see in the week prior to the report. Is this low spot on the curve the ideal place to express long option ideas? Could the elevated levels of volatility at the WASDE report a chance to defray some of the cost of options?

Pulling this together, I find different ideas for each of the underlying products. First, in Soybeans, I have an idea that can either be used as an outright bearish trade or used as a hedge for any traders who are long after prices bounced post the January WASDE report. This trade is a calendar spread, selling the high point in the term structure and buying the low point. Unique to this idea, however, is that I sell 1100 calls for the nearest date just after the February WASDE report and use the proceeds to buy the longer date 1020 puts. The interesting thing about this notion is that it leans into the overhead resistance that comes in at the 1100 level. In addition, it buys downside with an extra week to expiration, which may be interesting given the price action in Soybeans after the January report. Recall at that report, there was a big downward movement followed by a gradual higher movement in the coming weeks. If this number led to a big upward move into the resistance, it could be followed by a gradual lower move over the coming weeks in which case owning volatility and owning downside could be worthwhile. The key risk for this idea is if one were to use it as a way to express a short position in the underlying, there is a risk of higher prices, with a 1 to 1 downside on moves above 1100. The benefit versus short futures is that at expiration losses don’t accrue until above 1100 as compared to futures where losses occur immediately. If used as a hedge, the risk is an opportunity risk, again on moves above 1100.

The trade in the bottom chart is quite different. For one, the trade is bullish. It is a ratio call spread set at the longer expiration date, which is about 10 days after the WASDE report. It entails selling one 425 call and using the proceeds to buy two 440 calls. The trade takes in premium which is a benefit because if the trader is wrong and prices go south, they would still make a modest amount of money. If the trader is correct and prices break out strongly after the number, having held support and looking set to move, the trader makes an unlimited amount of money on large upside moves. So far, what is not to like? A trader could make a little on a move lower and a lot on a big move higher. What is the downside? There is never a free lunch, and the risk or downside of the trade comes on modest (and slow) moves higher. The trader loses money on moves in between strikes – 425 and 440. This is why I set the strike of the option I sell to a level below current futures contract prices, to give me a head start on getting to that breakeven on the upside. However, I have to be clear that the trader could lose the maximum of the difference between strikes if futures prices stay relatively where they are. Traders typically want big moves in either direction, preferably higher.

Catalysts are always the most exciting opportunities for traders, though they need to analyze the possibilities and what the market is pricing in. If they can do this with the tools from CME Group, traders are prepared to find the optimal trade to express their idea.

Good luck trading!

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