This bear market has me recalling a February conversation with some colleagues at the University of Minnesota. Corn and soybean prices were enjoying a midwinter rally, and the idea of pricing 2025 new-crop grain was presented. I questioned the idea.
“Who prices new-crop grain in February, especially with prices below production costs? This is not the time to price grain because February highs are rare. We will surely get better opportunities in the spring or summer.”
You know how this story ends. That rally I scoffed at in the dead of winter posted contract-year high prices for December ’25 corn at $4.80 per bushel and November ’25 soybeans at $10.70 bpa. Sigh.
Is there anything good that comes with a bear market? Yes, and that good thing is the return of large carrying charges in the corn market. And large carrying charges create an opportunity to sell the carry at harvest.
Carrying charges are the price differences between nearby and deferred futures contracts. In corn, positive carrying charges are generally the norm at harvest, but we have not had a large carry in the corn market since the harvest of 2019. The December ’25 to July ’26 carry has been trading near 35 bpa. This is a good carry, twice as large as your interest costs on stored grain.
Storage hedge
On-farm storage combined with a weak harvest basis and large carry offers a great opportunity to sell the carry in corn. How do you “sell the carry?” Here is the storage hedge in four steps
- Place corn into on-farm storage. Commercial storage at 3 to 4 cents per month will take the fun out of this trade.
- Price grain with the sale of deferred futures. Or use hedge-to-arrive, also known as basis-not-established. Contract with your local elevator. In early August, the July ’26 corn contract was trading near $4.40 bpa, or 35 cents higher than the December ’25 contract.
- Watch the basis narrow. The Minnesota-Iowa harvest basis of 50 cents under the December ’25 contract could be 30 cents under (or better) the July ’26 contract next spring.
- Unwind the hedge. Do this by selling corn in storage and buy back July futures contracts. This strategy will result in a cash price next spring close to $4.10 bpa. ($4.40 July futures sale less 30 cents under spring basis). That’s 55 cents better than the early-August harvest bids of $3.55 bpa.
Bear markets endure
Do you prefer to hold unpriced corn in storage? As you consider the opportunity for higher prices in the months ahead, I remind you that current prices are a result of pending record yields and production. In corn, export and feed demand have been strong, but supply has been even stronger. We can hope for higher prices after harvest, but bear markets can endure for a long time.
Selling the carry is a dull and conservative strategy because gains are limited to carry and basis improvement. If the big bull market of 2026 comes, you will leave money on the table.
Should you be worried about a lack of upside potential? If higher prices come, create a new plan to make some early and profitable sales of the 2026 crop.