Editor’s Note: Due to technical difficulties, Ag IQ In Depth is a text-only report this week.
This may be the week to sell some corn and soybeans, says grain analyst Mike Pearson.
Riding on an export wave, Pearson says farmers this week could see opportunity to sell corn at $4.50. On the soybean side, after tripping on the World Agricultural Supply and Demand Estimates released Nov. 14, soybeans rallied Monday and early Tuesday.
“I hope producers took advantage of that. … Now, we're seeing that pullback,” Pearson says, looking at the ticker on Tuesday afternoon during this week’s Ag Marketing IQ In Depth. “We're seeing the soybean market take a breath.”
Soybean markets experienced significant volatility this week, starting bearish after Friday's USDA report that dropped both soybean yields and the export potential. The market continued declining Sunday into Monday with beans down 5-10 cents overnight. The turnaround came when President Trump posted on Truth Social suggesting more China buying but the real catalyst was USDA's confirmation of that comment.
"It's one thing to have the president tweet it. It's quite another to see the USDA announce it," says Pearson, who is the host of This Week in Agribusiness and broadcast director at Farm Progress. He notes that USDA reported a flash sale of "792 metric tons of soybeans for delivery to China during this upcoming growing season. That's great news. That's 14 ships full of beans heading to China."
However, Pearson notes, competition remains fierce as "Brazilian beans are still cheaper than ours. Freight is still cheaper from Brazil. That's still where [China wants] to go economically."
Corn exports boost prices
Corn is a different story all around.
“Corn is America's strong suit,” Pearson says. “We are leading the pack in this. We are still the world leaders in price competitiveness when it comes to growing corn.”
For those who have heard the adage about low prices curing low prices, now is when the grain hits the ship.
“We grew the biggest crop—a blessing and a curse, of course, for those producers out there—but nobody else around the world can meet us in terms of price or logistics. So, we are running the table. This is a phenomenal, bullish story in the corn market right now.”
That story rests solidly in the export space. Export inspections released Monday showed the U.S. shipped 2 million metric tons of previously purchased corn. That's 80 million bushels of corn that was shipped in the week ending Nov. 13.
Pearson notes this represents “the largest shipping week in U.S. corn of any week all the way back to 2021” and marks "almost a 40% increase in corn shipped from the week prior.”
For benchmarking, Pearson says, “it's more than double what we were shipping in this same week a year ago."
Key for corn is that demand but it’s not something that suddenly pops in the way some other crops can suddenly shrink supply. How that looks on a price chart is a V when prices suddenly drop and then quickly rise or a hockey stick when they drop and stay down.
Recovery in the corn market will be a slow turn—think about those ships.
“There is so much concern in the global markets now about corn production, corn demand, broad agricultural commodity disruptions, that it's going to take a little while for those buyers to come back,” Pearson says. On that chart, he says: “We're going to see a U. I don't think it's going to be a V.”
Integral to that recovery is managed money.
Managed money greases the market
Looking into this week, Pearson targets December corn at $4.50.
“My hope is that it's going to start to pull some of that managed money, those spec funds who are kind of sitting on the sidelines in the grain commodities. Maybe we can pull them right back into the markets. I got my fingers crossed,” Pearson says. “We're going in the right direction. I would say if we're looking out into the future for the remainder of this week, my price target on the upside in December corn is $4.50.”
Though hedge funds can get side eyes from purely agricultural traders, commodity markets across the board often benefit when they move in. This is one of those times, Pearson says.
“We do not have a liquid market without them. They make up 50-80% of the trade on any given day,” Pearson says. “And if you want to see $6 corn, you need spec funds. If you want to see $8-$12 wheat, you need spec funds because that's who gooses these markets up to those levels.”