Top Tips on a Thursday
We all have biases, whether we’re willing to admit it or not. And as ag economist David Widmar puts it, sometimes we make a particular assumption “because it came with a story” while urging farmers to “ask whether the story actually makes an outcome more likely.”
Traders, economists, farmers and many others will carry their own set of assumptions into USDA’s August 12 Crop Production and WASDE reports, which have a history of producing some volatile outcomes. Fortunately, you still have time to prepare, and our experts have some several need-to-knows in this week’s edition of Top Tips.
- Will there be opportunities to cover fall fertilizer needs in the near future?
- Corn, bean basis patterns shifting from early-summer trends; knowing your local numbers is key to sound marketing
- PLUS: Ask yourself: Can I put myself in a position to capture equity and ride out short-term market fluctuations?
Matt Wiegand, FuturesOne
“With improved weather and negative energy markets, we have struggled to maintain much buying momentum this week even with a solid reversal scored during the Monday session. Soybeans have continued to see solid export bookings for new crop, but steady conditions, wetter weather for pod fill season, and weak product action have limited buying enthusiasm there. Corn saw further condition declines but the lack of additional threat to filling ears has helped to keep us bottled up at the lower end of the range despite strong shipments, and solid ethanol reports, while positive spillover from the world market has been more muted. Wheat action continues to consolidate a range with the weaker dollar, and choppy Euro trade has limited upside as well, with harvest pressure building for spring wheat it rolls forward. Biofuel margins should remain strong but further clarity will be needed to provide bullish or bearish spillover.”
“As we move into August with the next WASDE report coming next week, farmers will want to continue to watch basis levels to make sure harvest needs get squared away ahead of combines starting to roll. We saw a draw on distillates this week, but with heating oil futures falling, the seasonal window for remaining harvest fuels needs is starting to open as well, even if it is far from ideal with refinery bottlenecks.” – Matt Weigand, risk management consultant, FuturesOne
ACTION: Fall fertilizer offerings are becoming more widespread, so watch for the opportunity to cover fall needs in combination with ‘27 sales as we remain in the upper end of the range, especially on corn and wheat.”
Joshua Strine, Purdue University
“As we moved into August, the early-summer trend of corn basis strengthening across the Midwest largely ended. In parts of Indiana, Ohio, Illinois and Michigan, some local basis levels have fallen by more than 10 cents per bushel since last week. Iowa has the weakest basis levels, but it is the lone state where basis strengthened more than it weakened; however, the gains were muted, with increases of under 3 cents. Soybean basis trends over the past week have been more variable. In Illinois, basis broadly weakened over the past week. In Ohio, there were gains in the northern and western parts of the state, while the southern and eastern parts weakened. In Iowa, Michigan, and Indiana, the majority of local crop reporting districts saw basis increase.”
“Iowa’s corn basis weakness reflects high supplies, which softened local prices throughout the marketing year. Similarly, strength in Ohio stems in part from last year’s lower production. Trade and local processing are also part of the story. Basis along the Ohio River, specifically for soybeans, has been more volatile this year. While there is a premium for farmers able to access the river market in Indiana and Ohio, it has been smaller this summer than in recent years.”
“While soybean basis is outpacing historical trends across the region, premium from processing plants remains even higher. In Illinois, Indiana and Iowa, processor basis is 20 cents above the historical average, while many local basis levels are less than 10 cents above the average.” – Joshua Strine, Agricultural Economics, Purdue University
ACTION: As the 2025-26 crop marketing year ends, it’s important to understand what your local basis means and how it may affect your marketing strategy. If you have unmarketed grain in storage, basis levels will directly determine your strongest local spot price. If you have an open-basis position, such as a hedge-to-arrive contract, seasonal basis trends remain relevant to your final return. Farmers who have already locked both price and basis through a forward cash contract will be less affected by further basis movement.
For those with unpriced or open-basis grain, seasonal trends suggest that basis relative to September futures will weaken over the next month. Unless futures rise to offset it, weaker basis means lower returns. Now may be the best chance to lock in basis for the rest of the year.
Chase Koopmans, The Grain Ledger Rundown
“I want to be honest about the next couple weeks, because it makes me a little nervous. This is the stretch of the calendar that usually brings pressure to grains: the crop is mostly ‘made,’ harvest is coming into view and we’re going to see a lot of production numbers tossed around. The crop tours are heading out to walk fields and measure yields, and those numbers are going to be all over the map. Some estimates will be big and spark market selloffs, some will be low and spark rallies, and honestly most of them are measuring the same crop different ways. That’s going to make for a choppy, headline-whippy couple of weeks, and I don’t want folks getting yanked around by every number that hits the wire.”
“Longer term, I still see the bull story building behind the scenes if everything stays the way it is: the balance sheets are tight, corn’s demand is exceptional, China is buying beans, the Black Sea is a mess and August weather hasn’t fully traded yet. So, I’m holding the same two-sided view I’ve had for a few weeks: nervous about the next couple weeks and the noise they’ll bring, but constructive on the longer-term picture.” – Chase Koopmans, writer of The Grain Ledger Rundown blog
ACTION: Respect the dynamics typical for this time of year, stay patient and defensive through the choppy stretches, keep your protection in place and avoid getting emotional about any single crop-tour number. Know where your operation is profitable and let USDA’s August 12 report and the weather do the talking. In corn, treat bounces as chances to reward strength and get current, especially if you’re behind, rather than assuming the market rips straight back to the highs. In beans, watch the daily USDA flash sales and whether $12 turns into resistance.
Owen Wagner, Rabobank
“Last time we spoke, we floated the idea of the U.S. being the ‘best house in a bad neighborhood.’ What we meant by that was agriculture still faces many challenges, but the US is comparatively well-positioned relative to our competitors due to 1) the timing of fertilizer purchasing and the events in Iran and 2) weather that has been benign at home and more challenging abroad. Developments over the past month have only strengthened this view.”
“The 30,000 foot view, midway through the Northern hemisphere growing season, is that global grain output will fall by about 30% relative to last year. Dry weather and expensive fertilizer reduced Australian wheat area by 12% for 2026, and with associated yield pressure, output there is expected to decline by about 30% relative to last year. In India, and the Philippines, summer sewn crops like rice and corn are expected to struggle in the face of El Nino, delayed plantings and inadequate moisture. In the Philippines, the government has even gone so far as to marshal its Air Force for cloud seeding in drought prone areas.”
“In Brazil, which typically faces more modest impacts from El Nino than Southeast Asia the industry may end up proving the old adage of the best cure for low prices being low prices. Confronted with high input costs, high interest rates and a strengthening currency Brazil’s soybean expansion there is expected to stall for the first time in nearly 20 years. On the demand side, meanwhile, growth there in corn based ethanol will ensure that the US remains the world’s leading corn exporter, after briefly ceding that crown in 2023.”
“While not an exhaustive summary, these anecdotes support the viewpoint that grain production will be constrained in the year ahead, particularly among major exports. The Corn stocks-to-use ratio for major exporters, for example, could end at its lowest level since 2020. That said, the U.S. is something of a standout as a major exporter that is shaping up to produce a decent crop in the year ahead. While unlikely to best last year’s record yields, crop condition models support the notion of U.S. corn and soybean yields above trend.” - Owen Wagner, senior grains and oilseed analyst, Rabobank
ACTION: Make contingency plans as long as models support U.S. corn and soybean yields staying above trendline averages.
Mark Knight, Farmer’s Keeper
“Carry has been building in the corn market much of the summer, with March 2027 futures hitting a 16-cent premium to December 2026 futures this week, the highest in at least a year. The expanding carry suggests the market sees supplies tightening and demand remaining strong next year, which may reward storage-based positions. Producers might consider strategies to “capture” or protect that carry through certain options positions. If the spread widens, then your physical bushels will become more valuable in storage. If the spread tightens then you may make money in your brokerage account.”
“This strategy would be a true hedge for unpriced bushels that are put in bins, and it’s similar to what most commercial storage facilities do to protect themselves against carry falling apart. The March 2026-December 2025 spread did not reach 20 cents last year when we had a huge crop and carryout, so I see maybe 5 to 6 cents of risk on this trade.” – Mark Knight, Senior Analyst, Farmer’s Keeper
ACTION:
Buy December corn futures and sell March corn futures (with the latter at a price premium of about 16 cents).
Lauren Urbanczyk, Texas Hedge Risk Management
“The goal for this week is to give the market your time and not your money. These grain markets are in summer mode, with focus still on weather. However, momentum and money flow are chasing headlines and price action in outside markets. Right now all of the focus is on equities and energies, with grains taking the backburner. Exports are still strong and USDA data is still highly variable, so there are still a lot of things that can change this market between now and harvest. The goal is to give yourself enough protection that you feel comfortable giving the market your time and not your money. Cattle producers should consider the same questions: "Can I put myself in a position to capture equity and ride out short-term market fluctuations?" To me this involves option spreads that trade a range-bound market, but the answer will be different for every producer.” – Lauren Urbanczyk, cofounder, Texas Hedge Risk Management
ACTION: This week, farmers need to be comfortable with their sold percentages and if they have any amount of discomfort, they should look at increasing cash sales or hedges and accompany those positions with options.
David Widmar, Agricultural Economic Insights
“Which seems more likely – China buys more U.S. soybeans in 2026-27? Or China buys more U.S. soybeans in 2026-27 because of concerns around South American corn production?”
“Many of us will choose the second option because it came with a story. Statistically, however, the first is more likely. Why? Both options have the same outcome, but the first is not limited to a single reason. China could also buy more U.S. soybeans because of disappointing domestic production, a stronger Chinese economy, or trade commitments.”
“Before acting on a market narrative, ask whether the story actually makes the outcome more likely, or simply makes it easier to imagine.” – David Widmar, ag economist, Agricultural Economic Insights
ACTION: This week, identify a situation where a compelling story has an outsized influence (bias) on your thinking.
Tanner Ehmke, CoBank
“CME Group recently announced it will launch a sorghum basis futures contract on August 24. The contract will trade as a price differential to CME’s corn contract, offering a means for farmers and grain traders to trade sorghum basis or flat price if paired with corn futures. Historically, grain traders have hedged sorghum on the corn contract.”
“If the new contract gains traction, it could become a valuable tool for the sorghum market as the expanding biofuels industry drives greater demand for the feedgrain. The challenge with hedging sorghum on the corn contract is the volatility in basis. That became evident most recently when China stopped buying U.S. sorghum. Sorghum basis fell sharply because cash sorghum prices collapsed while corn futures held comparatively strong because the market was pricing corn fundamentals. The corn contract therefore didn’t reflect sorghum fundamentals or the steep loss in sorghum demand from China.” – Tanner Ehmke, Lead Economist, Grains and Oilseeds, CoBank
ACTION: Keep an eye on trading activity, including volume and open interest levels, in the new sorghum contract. Theoretically, the contract could offer protection against that basis volatility that’s unique to sorghum and may become an effective risk management tool. With sorghum prices often driven by unique market fundamentals, basis variability can often be extreme versus corn.
Mike Zuzolo, Global Commodity Analytics & Consulting LLC
“I’ve been suggesting to clients and subscribers these past couple weeks that higher prices in grains and soy could be seen given the analog years I’ve been using since the June Acreage & Stocks reports and also given key fundamentals I’m tracking. Paris corn remains at $7 to $7.50/bu. versus Chicago at $4.35 to $4.50. However, the lack of ‘bullish’ enthusiasm seems rooted in focusing more upon U.S. weather instead of global weather – and also expectations of improving commodity logistics in both the Middle East and Baltic. Will the trade reassess these assumptions after the WASDE report? I think so: if USDA confirms both lower United States and European Union corn yields.” – Mike Zuzolo, founder, Global Commodity Analytics & Consulting LLC
ACTION: Watch to see if traders reassess some current market assumptions after next week’s WASDE report.