America's farmers face extraordinary market volatility as billions of dollars in computer-driven speculative funds whipsaw commodity prices, creating challenges for producers trying to lock in profits, according to Arlan Suderman, chief commodities economist at StoneX.
On this week’s episode of Ag Marketing IQ In Depth, Suderman says: "Today's markets are largely driven by billions of dollars of speculative fund money with … the majority of trades being put on by computers without a human element being a part of it.”
The result is a headline-driven market.
Recent geopolitical events illustrate the problem. When conflict erupted with Iran, algorithmic traders immediately bought energy and grain commodities, assuming the Strait of Hormuz would close. When tensions eased, computers reversed course just as quickly.
"We see the markets do things that don't make sense at times in the short run," Suderman explains.
The former Farm Futures editor emphasized that fundamentals still matter. USDA forecasts nearly two billion bushels of corn carryout and over 300 million bushels of soybeans — adequate supplies that shouldn't drive prices higher. However, China's commitment to purchase 25 million metric tons of soybeans under a trade agreement remains uncertain, and a lack of follow through there could push prices lower. And the market is aware that USDA isn’t pricing in any China purchases of other grains.
“If China were to buy all 25 million metric tons of soybeans and let's say 5 to 7 million metric tons of corn — they could do more, they could do less. ... All of a sudden, that would be pretty bullish,” Suderman says. “On the other hand, if they say, you know, we don't know what you're talking about, President Trump. We didn't make any commitments to buy anything. We're not going to buy anything this next year. Then that's very bearish.”
For China, he says, that’s a political decision. “They want access to our vast consumer market. So, I think they will buy. Do I think they'll buy 25 million metric tons of soybeans? No, probably 12 to 15 million metric tons.”
The market is pricing in a portion of the reported 25 MMT of soybeans, Suderman notes. “If they buy more, that's bullish. Unfortunately, we probably won't know how much they're going to buy until next fall.”
And that’s why farmers can’t make decisions based on headlines.
Two steps toward profit
Given that geopolitical action isn’t in a farm leader’s purview, Suderman advises farmers to make decisions based on data they can manage, such as break-even costs. “Focus on what you can control and forget about what you can't control," he says. "What you can control is knowing what your individual break-evens are."
He also recommends producers lock in prices that guarantee profitability and secure fertilizer contracts now, as Middle East tensions will likely tighten supplies for 2027 regardless of current peace prospects.
To hear more from Suderman, watch Ag Marketing IQ In Depth.