Top Tips on a Thursday
Most farmers have never been to Iran, but what’s been happening in the Persian Gulf over the past few months could have major implications for their operations this coming year. The “ripple effects,” as one expert put it, could create serious issues moving forward.
That’s just one topic addressed in the latest edition of Top Tips. The emerging El Nino is also front-of-mind, which could trigger weather-related rallies moving forward. Being flexible and knowing your break-evens remains paramount in these uncertain times.
Keep reading to see what actionable items you may want to consider this week.
- Be ready to move on weather-related rallies and fertilizer pricing opportunities.
- Focus on what you can control and let go of what you can’t.
- PLUS: In today's rapidly changing market, have options around all of your positions.
Shelby Bass, AgAmerica Lending
“When fertilizer prices rise, the ripple effects can include reduced profit margins, increased borrowing needs and limited flexibility to respond to changing market conditions. Whether it’s too much reliance on global markets, anticompetitive practices or any of the other potential contributors that people argue over, the reality is that American producers have little control over fertilizer cost trends.
“The good news is there are steps you can take as a producer to help offset the financial impact. First, approaches like soil testing, nutrient mapping, variable rate applications and split applications do not eliminate fertilizer costs, but they can help ensure that each dollar spent is contributing as directly as possible to yield and revenue potential. Second, take time to plan ahead when it comes to purchasing decisions instead of being forced into high-cost input windows at critical points in the growing season. Third, maintain financial flexibility so you can act quickly when input pricing opportunities arise so you can avoid forced purchasing decisions under cash pressure.” – Shelby Bass, senior content manager, AgAmerica Lending
ACTION: Plan ahead for your fertilizer needs now to avoid getting your wallet pinched down the line.
Mike Zuzolo, Global Commodity Analytics & Consulting LLC
“Are grains and soy investment funds jumping from one possible supply squeeze to another? Even though the market seems to be moving away from the Middle East energy supply squeeze to drive prices higher in April and then lower since mid-May, assuming that the MOU with Iran leads to free-flowing oil again out of the Strait of Hormuz, could we see futures funds now turn toward the global El Nino threat to add premium to the grains and to soy as we head into the end of June acreage update by USDA and the July 4th holiday? I think that this could be more likely than normal given that global commodity demand remains strong—which we can see by the cash premium versus the futures currently.
“Generally, given that investment funds have been the major driver for futures weakness while cash prices remain supported, I’m recommending them to consider paper hedges instead of cash-related hedges for the next 10 to 14 days if technical resistance levels can be challenged on this potential El Nino-led short-covering rally. Wheat remains my ‘leader’ in price trend, so I’ll be watching for a high first in this complex, followed by corn and soybeans. This is especially the case given the rare counter-seasonal harvest rally this year. I do want remind readers that commodity trading involves substantial risk of loss and is not suitable for all investors.” – Mike Zuzolo, founder, Global Commodity Analytics & Consulting LLC
ACTION: Keep close watch to see if an El Nino-led short-covering rally is triggered in the near future.
Chris Vlachopoulos, ICIS
“While the de-escalation with Iran is bearish for urea and nitrogen, phosphates remain structurally tight. The market narrative of ‘back to normal’ is nitrogen-led and in that sense, somewhat misleading. Phosphates still depend heavily on sulphur, which is still heavily constrained. Around 50% of global seaborne sulfur exports go through the Strait of Hormuz, which is the starting point of the phosphate chain. So, even if this is a situation where the Strait reliably reopens, phosphate supply recovery is likely measured in months rather than weeks.
“In an open strait, phosphate inventories, must be rebuilt, plants will need to restart, shipping and logistics must fall back into place, and insurance will need to be recalibrated to the new risk environment. Until those pieces fall back into place, the phosphate market is likely to remain more fragile than current nitrogen price movement might suggest.” – Chris Vlachopoulos, fertilizer specialist, ICIS
ACTION: Keep an eye on phosphate prices and availability, which may struggle into 2027.
Arlan Suderman, StoneX
“Do what you know. You have to focus on what you can control and forget about what you can't control. What you can control is knowing what your individual break evens are. What are your costs? And, when you get a price opportunity that allows you to guarantee that you'll be in business in the coming year, take it.
“Have some flexibility. Use some of the marketing tools available to take advantage of rallies that come after that. The key is to make sure your focus is on being in business next year.” – Arlan Suderman, chief commodities economist, StoneX
ACTION: Know your break-evens. When a price pops that offers a profit for your farm, take it.
Lauren Urbanczyk, Texas Hedge Risk Management
“What should farmers be focusing on for next week? For one, we should all make ourselves aware of upcoming reports that could impact the market, which in this instance includes the Quarterly Grain Stocks Report on June 30. At this point in the month, we should reconcile our actual planted acres versus expectations and thoroughly update our marketing plan on paper. What is our expected production? Determine how much (if any) we have forward sold, how that compares to normal volumes, and other relevant metrics.
“Once we know these metrics, we need to create a marketing plan, review it, and update it as we finish planting and advance further into the growing season. Specifically, I would look at re-owning cash sales with calls, after the historic drop in corn prices earlier this month. If the quarterly grain stocks report provides some market movement, we want to be prepared, know exact quantities, have sell orders working, etc. I want to start working GTC orders via futures or cash in case we get a retracement of June's sell-off. I want to own calls now, and I want time to be on my side, so I want to buy some calls with some time value. However, in this environment I want to back my way into those calls as cheaply as possible. Having a hedge account and someone who understands options pricing is key.
“I also want to have some sell orders working in case if we do get a 40-50% retracement. In today's rapidly changing market I want to be sure that I have options around all of my positions, not only protecting my downside but also guarding against equity loss of higher sales and managing cash flow on hedges if we experience a late-summer weather event. Those are certainly possible. In short, this is a great week to review where we've been and prepare for where we could be headed.” – Lauren Urbanczyk, cofounder, Texas Hedge Risk Management
ACTION: Consider buying some calls that have time value.
Ben Pratt, The Mosaic Company
“The closure of the Strait of Hormuz intensified shortages of an already tight global sulfur supply. This shortage has also affected phosphate production as 0.4 tons of sulfur is required for every metric ton of phosphate produced. But with sulfur prices tripling since the start of the conflict in Iran, the situation has caused production curtailments across the phosphate industry, with available supply falling 20% to 30% short of demand.”
“That means farmers are going to have to assess fertilizer purchases based on value and return rather than just hard costs. It’s going to be important to note any in-season nutrient deficiencies this year, soil test after harvest, and create a plan to address nutrient needs for the 2027 growing season.” – Ben Pratt, vice president of public affairs, The Mosaic Company
ACTION: Keep track of your nutrient deficiencies throughout this season and soil test after harvest as you prepare for 2027.
Mark Knight, Farmer’s Keeper
“After the bloodbath the last three weeks, the corn market is showing signs of putting in a bottom. I’d be patient on making sales, as I believe we will still have better opportunities down the road. If you have old-crop corn you have to get rid of, I would absolutely take advantage of a little gain on the basis side as this market sold off and ‘re-own’ it on the board using futures or options.
“For soybeans, we're still significantly higher than last year’s prices, and with more acres this year, I’d avoid re-owning soybeans. The June 30 Acreage report is going to be huge for soybeans. For those who don't have new-crop hedged yet, you have a couple weeks to do so.
“On the 50-cent break in corn, basis improved by about 8 cents, meaning farmers 42 cents of real cost. I want to emphasize that farmers’ actual price comprises two components: Futures and basis (the positive or negative difference in what the local elevator will pay). In many cases, these two prices work against each other, so if the futures market breaks hard, you would expect the basis to improve. A farmer can improve his price by pricing those two aspects of price at different times.” – Mark Knight, farm marketing consultant, Farmer’s Keeper
ACTION: Buy July corn futures at an average of $4.58 ($4.66 and $4.51, currently down about 42 cents); Buy September corn $5.50 calls for 2.75 cents (currently down about 1.5 cents); Buy September corn $6 calls for 4 cents (currently down 3 cents).
Ashley Koenig, Barchart
“Understanding trends in basis and cash markets is important in making marketing decisions. Based on Barchart’s cmdtyView AI assistant, Midwest grain basis trends heading into June 2026 reveal a stark East-versus-West divide. While the eastern Corn Belt (Ohio, Indiana, Michigan) is experiencing notable basis strength, the western Corn Belt (particularly Iowa) continues to lag significantly below historical averages. The defining feature of the current corn basis landscape is the shift in strength from west to east.
“In Ohio and Michigan, corn basis is tracking above the three-year historical average in almost all crop reporting districts. South-central Ohio is a major standout, with basis levels 25 cents per bushel above its historical average. In Indiana, most districts are near or slightly below historical norms, but several districts along the Ohio River are carrying positive basis.
“In Iowa, basis remains deeply depressed compared to the three-year average. Northwest Iowa is the most extreme example, with corn basis at minus-40 cents (57 cents below its historical average). Illinois is tracking much closer to historical norms. For example, Central Illinois country elevators recently averaged a corn basis of minus 20 cents versus July futures.” – Ashley Koenig, head of account management, commodities, Barchart
ACTION: Lock in historically strong eastern basis levels using basis contracts to eliminate basis risk while leaving the futures price open to capture potential summer weather rallies. Conversely, in the western Corn Belt where the basis remains deeply depressed, avoid locking in weak basis; instead, consider utilizing minimum price contracts or put options to protect the downside on futures while waiting for local cash demand to recover.