PRAIRIE ROUTES
NEWS

Good morning, a significant winter storm will impact the prairies through Christmas, with 10 to 20 centimeters of snow expected in central Alberta and 5 to 15 centimeters across southern regions by Christmas morning. Extreme wind chills between –45°C to –50°C will pose serious risks across Alberta, Saskatchewan, and Manitoba, with blizzard conditions likely. Following the storm, colder Arctic air will remain entrenched through year-end, keeping daytime highs well below normal and making travel and livestock conditions hazardous.

MARKET PULSE

Commodity Market Update

Jan & Feb futures brief for today

Holiday trading is extremely light with markets closing early today and shut down Thursday, but overnight action into December 24 has brought a sharp wheat rally on Russia-Ukraine supply concerns, while hogs surged and cattle consolidated after recent strength.

Wheat (Mar SRW & HRW) opened dramatically higher overnight, up 4.25 cents SRW and 4.75 cents HRW, as Russia escalated attacks on Ukrainian Black Sea port infrastructure over the weekend, curtailing grain exports. March SRW is now up 11.5 cents for the week. This geopolitical risk premium is tactically meaningful for Canadian producers holding inventory. The key reality: Global wheat ending stocks remain at record levels (274.9 million tonnes), and Argentine production hit an all-time 26.8–27.7 million tonnes, so this is a tactical rally, not a trend reversal. ​

Corn (Mar '26) is up 1.5 cents overnight and testing three-week highs near $4.40/bu. The USDA raised U.S. corn exports by 125 million bushels to a record 3.2 billion bushels, with Q1 export pace running over 800 million bushels, the highest on record. U.S. ethanol plants continue running near record rates. Canadian corn basis remains attractive in Ontario. ​

Soybeans (Jan & Mar '26) rallied overnight, but year-to-date January soybeans are down 77.25 cents. The overnight move is purely technical short-covering on holiday thinness; the structural bear case remains intact with Chinese demand still recovering and South American crops on pace to be record-large (Brazil at 177.1 million tonnes). Late last week China purchased 396,000 tonnes, bringing cumulative commitments to 6.2 million tonnes toward their 12 million tonne target, but this is still well below historical norms. Canadian soybean basis is holding steady.​

Live Cattle (Feb '26) fell $1.90 overnight to $228.82 after hitting two-month highs Monday as speculators took profits. Cash trade remains light at $228–$229/cwt. The structural story matters: USDA reported cattle on feed at 11.7 million head (down 2% YoY) with November feedlot placements 11% below 2024, signaling tight supplies ahead. CME Feeder Cattle Index strength and October Alberta feeder calf prices at CAD$676.71/cwt confirm feedlot operators are in strong hands. ​

Lean Hogs (Feb '26) posted sharp overnight gains, rising 62 cents to $85.97 to hit a two-month high, as traders positioned ahead of the USDA's Hogs and Pigs report. The December report confirmed breeding inventory down 0.9% YoY at 5.952 million head, bullish for future supply tightness. CME Lean Hog Index sits at $83.71, well below February futures, signaling additional upside. Pork cutout values were firm at $100.72/cwt. ​​

Natural Gas (Jan '26) is trading near $4.48/MMBtu, up 1.64%. S&P Global expects 2026 and 2027 prices higher than 2025 as U.S. LNG export capacity grows. Near-term remains under pressure from mild weather forecasts and ample storage.​

How to position into the day

• Wheat: Execute forward sales on geopolitical strength. This is tactical, not a trend reversal.

• Corn: Lock in basis on old-crop before December closes. Expect gradual moderation into new-crop season.

• Soybeans: Sell any overnight strength; don't chase rallies until sustained Chinese demand is confirmed.

• Cattle: Use pullbacks to establish positions. Structural tightness supports the trend despite consolidation.

• Hogs: Momentum is bullish. Breeding inventory cuts support further strength into Q1 2026.

• Energy: Crude has geopolitical support but structural headwinds. No urgency to chase. Expect modest input cost relief.

Not financial advice.
Data sources: Pro Farmer, ADMIS, Barchart.com, TradingEconomics.com, Producer.com

TRENDS

📈 The Bulls and 📉 The Bears

📈 Bullish:

• Russia's Escalated Attacks on Ukrainian Grain Facilities Renew Supply Risk Premium - Over the weekend before Christmas, Russia stepped up attacks on Ukraine's grain infrastructure, triggering a rally in wheat futures as traders repriced geopolitical supply disruption risk. Wheat gained 5-5.5 cents across SRW, HRW, and spring wheat contracts, with the market acknowledging that any further infrastructure damage could disrupt logistics and reduce available export supplies. ​

• Hog Futures Surge Ahead of Bullish Inventory Expectations - February lean hog futures posted a 60-cent rally to $85.95 on December 23, hitting a two-month high as traders positioned ahead of the December Hogs and Pigs report (due Thursday). Estimates point to declining hog inventory and breeding stock, which would support sustained higher prices into Q1 2026. The CME Lean Hog Index at $83.71 is well below futures prices, signaling additional upside potential. ​

  Canadian Barley Exports Up Year-Over-Year; Australian Competition Mounting - Canadian barley year-to-date export shipments are up to 1.259 MMT (through week 19), ahead of 922,000 tonnes to the same date last year. However, Australian barley landed in China is now priced at a discount to Canadian barley, creating competitive pressure that may slow the export pace in coming weeks. The silver lining: strong seasonal domestic feed demand in December-January is providing a floor under prices, as feedlot inventories are at peak levels. ​​

📉 Bearish:

• Canola Exports Plummet 43% Year-Over-Year; Chinese Tariffs Obliterate Demand - Year-to-date Canadian canola export shipments through December 14 totaled just 2.4 MMT, down sharply from 4.2 MMT to the same date last year, a devastating 43% decline. The culprit is clear: Chinese tariffs have effectively blocked Canadian shipments to that country, the world's largest canola importer. With the record 21.8 MMT Canadian crop and Chinese demand effectively shut down, the market is drowning in domestic supply with nowhere for it to go. ​

• Cattle on Feed Down 2% Year-Over-Year; Feedlot Placements Sharply Below 2024 - While cattle on feed tightness supports prices structurally, the USDA's December report showed 11.7 million head as of December 1, down 2% year-over-year, with November feedlot placements running 11% below 2024. This suggests the supply tightness is creating a bifurcated market: tight supplies support prices in the short term, but declining placements could lead to sharply lower production in Q2-Q3 2026, creating a boom-bust cycle. ​

• Crude Oil Faces 3.8 Million Barrel-Per-Day 2026 Global Surplus; Structural Downtrend Intact - The IEA's December forecast projects a massive 3.8 MMbpd global crude surplus in 2026, representing nearly 4% of global demand. OPEC+ is unwinding production cuts, and non-OPEC supply growth is robust, creating a structural oversupply backdrop that will keep crude under pressure throughout 2026. WTI is on track for its worst annual performance in seven years, down 21% year-to-date. ​

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INCASE YOU MISSED IT

Quick Hits on Policy and Relevant News

🚂 CTA Rules CPKC Exceeded Grain Revenue Cap; CN Below Limit for Crop Year 2024-25
The Canadian Transportation Agency issued a determination Friday showing that Canadian Pacific Kansas City exceeded its grain revenue entitlement for the 2024-25 crop year, while Canadian National Railway came in below its maximum revenue cap. The ruling underscores divergent performance between the two carriers as the railway system moves record grain volumes to export terminals.​
Real Agriculture

🌾 Feed Grain Prices Pressured by Record Barley/Wheat Harvests; Seasonal Demand Provides Support
Canadian feed grain prices have been pressured downward following Statistics Canada's report confirming record barley (9.7 MMT) and wheat harvests this year. However, seasonal domestic feed demand peaks in December-January as feedlot inventories reach their annual high, providing a temporary price floor until farm selling accelerates after the New Year.​
Producer

💰 USDA Reports Cattle on Feed Down 2% Year-Over-Year; Feedlot Placements 11% Below 2024
The USDA's December Cattle on Feed report placed inventory at 11.7 million head as of December 1, down 2% from December 2024. More concerning for feeders: November feedlot placements were 11% below 2024, signaling that tight feeder calf supplies will persist into Q1 2026.​
Canadian Cattlemen

📉 Crude Oil Tracks Toward Worst Annual Performance in Seven Years; Global Surplus Weighs
WTI crude oil is down 21% year-to-date in 2025, tracking toward its worst annual performance since 2018, amid projections for a 3.8 MMbpd global surplus in 2026. OPEC+ production cut unwinding and robust non-OPEC supply growth are expected to keep crude pressured throughout 2026 unless major geopolitical disruptions occur.​
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