Grain Market Commentary 2/3/26
CBOT Pricing:
Corn closed 2-3 cents higher, supported by strength in soybean oil and soybeans, additional clarity from the 45Z guidelines on how ethanol plants can reduce Carbon Intensity scores, and continued drought conditions in parts of Argentina. The Mar26 and May26 contracts both settled 3 cents higher at $4.285 and $4.3575, respectively. Jul26 futures gained 2.75 cents to close at $4.42.
Soybeans finished the session 4-7 cents higher, supported by gains in soybean oil following the IRS release of proposed tax rules for the 45Z tax credit (read more below). Upside was limited by several analysts raising Brazilian yield estimates. The Mar26 contract gained 6.5 cents to close at $10.6575, while May26 futures settled at $10.7752, up 5.75 cents. The Mar-May spread firmed again, settling at -11.75 cents, as hopes continue that the Illinois River will return to normal levels by the end of first notice day.
Market Headlines:
The IRS released proposed 45Z tax credit rule:
The IRS released the proposed 45Z tax credit rule today and it will be published in the Federal Register tomorrow. Following publication, the rule enters a 60-day public comment period, with a public hearing scheduled for May 28, 2026.
Under the proposal, the tax credit value ties directly to carbon intensity (CI), with lower-emission fuels earning higher credits. In addition, all qualifying fuel produced after December 31, 2025 must use feedstocks sourced from the United States, Canada, or Mexico, which would support North American farmers. However, producers cannot claim the 45Z credit in the same year or facility as the 45V, 45Q, or 48(a)(15) credits. Furthermore, restrictions on foreign-controlled entities will phase in beginning in the 2025–2027 period.
As a result, soybean oil rallied and lifted soybeans, as the market viewed the proposed 45Z credit as supportive for North American agriculture.
Brazilian soybean yield estimates continue to rise:
Brazilian soybean yield estimates continue to trend higher. StoneX raised its estimate to 181.6 mmt from 177.6 mmt. Celeres, a Brazilian agricultural consultancy, increased its forecast to 181.3 mmt from 177.3 mmt. The USDA currently pegs Brazil’s soybean production at 178.0 mmt, up from its prior estimate of 175.0 mmt.
US/India trade deal details:
President Trump and Prime Minister Modi agreed to a trade deal between the United States and India. Under the agreement, India will halt purchases of Russian oil in exchange for the United States reducing the reciprocal tariff on Indian goods from 25% to 18%. The original 25% tariff had been imposed in response to India’s continued purchases of Russian oil.
In a social media post, President Trump stated that India would move to reduce tariffs and non-tariff barriers on US goods to zero. He also said Prime Minister Modi committed to purchasing $500 billion of U.S. energy, technology, agricultural goods, coal, and other American products, though no specific timeline was provided.
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