It’s hard to believe that we are already halfway through August! Seems like just yesterday I was writing an article discussing Plant 25 being around the corner. We have had quite the growing season in 2025.
- Parts of the Western Corn Belt showed record crop ratings all summer long, never missing a rain. Iowa for example is currently rated 85% Good/Excellent and Wisconsin is at 81%!
- Areas, such as Southern Illinois, Southern Indiana, and parts of Ohio, struggled to just get the crop planted at all. I personally had customers in my immediate area being pushed right up to their insurance deadline – planting corn for the first time June 20-25.
That said, it’s clearly obvious that traders see this thing as a monster. Each week, it seems, another corn yield prediction is announced in the mid- to upper 180s, completely obliterating the all-time record set last year at 179.3 bpa. But have we gone too far? Doesn’t the USDA realize all of the problems in the fields this year? Didn’t they see the flooding in the south? Tassel wrap during pollination? Tar spot and southern rust showing up late?
We could sit here and debate about the size of this crop for days, but that isn’t going to help much. We have to keep moving forward. The crop was planted. It looks to be good. The market sees enough old crop bushels to get us to harvest. And September is just around the corner.
Key now is:
- Stay focused.
- Don’t quit.
How to turn 2025's bumper crop into a price opportunity?
Try not to get stuck in the rut of how tough things are right now. Don’t get trapped into believing farmers can’t make money in 2025. Focus on the things that need to be done every year.
- Walk your crop and evaluate how good you truly think it is.
- Focus on the basis part of the equation. There’s a good chance we as farmers are all going to need money this fall. When you couple that with the fact that our crop size looks big and our new crop export programs - especially soybeans – have question marks, I believe the gut-slot harvest basis has risk.
- Get ahead of harvest. Consider writing up basis contracts on the bushels you don’t have pre-sold before we get there. Don’t let the current futures price cloud your judgement. We have no control over that.
- Take control. What we do have control over is how we are going to manage our crop with the current dynamics. And it all comes at us so fast during harvest, that we need to have a plan before we hit the field.
- Evaluate call options. Be prepared to re-own your fall delivery sales with call options. In my opinion, anything you are forced to sell this fall should be backed with calls. Is there a chance that the call purchase might not yield a positive return? You bet. But it gives you cash flow at a time that can truly benefit your operation, and at the same time keeps you in the market.
- Pay bills. Reap discounts. Take the money from your sales this fall and use it to pay down seed, fertilizer, chemicals, and interest. Those are discounts that can make a significant difference to your bottom line. Then rest easy knowing that you have a position in place with the call options that can provide upside.
Will history repeat?
All of us are negative about prices, and I get that. It’s been a long year. But just look at what happened last year coming out of harvest.
- The May 25 contract traded around $4.15 at the end of August and the future looked awful.
- Out of nowhere we rallied $1 to nearly $5.20 by the end of February.
No one could predict that rally, and no one will be able to predict the next one. Just don’t get caught watching it happen with no way to participate. Get prepared and then act on it.
What options can I buy?
- May 26 Futures on Aug. 5: $4.30
- May 26 $4.30 Call Option: 23 cents
Not saying it happens, but a similar post-harvest rally could potentially add 75 cents to your harvest sales this fall. That gives you another chance at locking in $4-plus cash corn. I like the May call options in corn:
- May call options give you enough time to take advantage of an early spring weather problem.
- May options don’t expire until the third week of April.
- Right now, with volatility being low, you can buy that much time relatively cheap.
- Here’s an example: the at-the-money $4.30 May call costs around 23 cents. That’s nearly eight months of time for only 3 cents/month. If you were to store grain in the elevator or on the farm right now, the interest alone is around 2 ½ cents/month – and that doesn’t include any storage costs.
What about beans?
- March 26 Futures on Aug. 5: $10.22
- March 26 $10.30/$11.30 Call Option Spread: 27 cents
We all tend to forget about soybeans. But this year I think they will be quite important to manage. With so many questions around China buying U.S. soy, I think you will have to stay aggressive. Our ATI research team is already predicting an additional 160 million bushels of ending stocks higher than USDA estimates during the 2025-26 marketing year. And it’s simply a direct result of lower soybean exports.
It now sounds like China is covered through September and already has a decent start on October. So, I’m skeptical we see much of an aggressive cash market until at least November or December. But don’t get discouraged. Try to focus on the timeframe where we could see some upside movement.
South American harvest doesn’t really get started until we get into February. So, that means a March call option or call option spread might cover you through the window where we could see an increase in U.S. export activity. And the nice thing about the March call is that you don’t have to pay for a ton of time value.
Look at what March 25 futures did this past year. We saw a $1.30 rally off of the August lows during September, and then another $1-plus rally from the middle of December through January. Just because we haven’t seen much volatility, yet this year doesn’t mean it won’t happen at all. Be ready to take advantage.
Looking ahead
So, as you take the next three weeks to finish harvest preparations, make sure you carve out a little time to memorize your marketing playbook. Don’t worry about what opportunities you missed during the 2025 marketing year. There’s nothing behind you that is going to help.
All the things that you need to finish the year strong are out in front.
- Manage your fall delivery basis.
- Find a way to initiate cash flow.
- Take advantage of input discounts.
- Make sure you can participate in potential market rallies.
If you do these four things, I’m confident you will come out on top.
Advance Trading, ATI, and ATI ProMedia are DBAs of CIH Trading, LLC, a CFTC registered Introducing Broker and NFA Member. The risk of trading futures and options can be substantial. All information, publications, and material used and distributed by Advance Trading shall be construed as a solicitation. ATI does not maintain an independent research department as defined in CFTC Regulation 1.71. Information obtained from third-party sources is believed to be reliable, but its accuracy is not guaranteed by Advance Trading. Past performance is not necessarily indicative of future results.