Top Tips on a Thursday
The August World Agricultural Supply and Demand Estimates report, which often proves to be a volatile entry in USDA’s deck, certainly lived up to the hype on Wednesday after tightening stocks and lower-than-expected yield projections pushed corn and soybean prices substantially higher in midweek trading.
That now begs the question – what’s next? Corn prices saw a moderate setback Thursday morning on a round of technical selling and profit-taking. But the stars might be aligned for some future gains later this summer, as our latest round of Top Tips hints at. Keep reading for some fresh analysis and possible action items you may want to consider taking in the wake of WASDE.
- Watch to see if a narrative of tightening U.S. grain supplies develops.
- Consider re-ownership opportunities for bushels you’ve already priced.
- PLUS: Post-WASDE, a weather market may return to the forefront in the near future.
Matthew Pot, Grain Perspectives Inc.
“No marketing plan should ever be focused on the August USDA report. With my clients, we plan in May, June and July. For the most part, we try not to get caught up in the drama of August price action. But that does not mean we should not pay attention to the data we have been given. In the report, new-crop ending stocks ended up below trade estimates because the USDA increased new-crop export demand by 75 million bushels to 3.275 billion, while also increasing old-crop exports by 75 million bushels. Production remained largely unchanged, despite a rise in acres and a decline in yields. New crop corn ending stocks-to-use is now sitting at 10.1%. A 10% stocks-to-use estimate is a pivotal number, but while the headlines debate yields, the more important changes in yesterday's report were largely driven by demand for a marketing year that has not yet begun.
“Does that mean the corn market could be shaky? Yes. It puts us in a scenario where, over the coming weeks, the market could begin watching new-crop export sales more closely than crop conditions. Among all of this is a large amount of outright long positioning held by the funds, which may want to exit ahead of a fall in which the Federal Reserve could tighten monetary policy – a scenario that would create another potential headwind for speculative long positions in corn. In the near term, farmer selling and fund liquidation could cap rallies until we move further into fall. Tighter stocks equal more volatility. Within that context, expect volatility to remain elevated into October.” – Matthew Pot, founder, Grain Perspectives, Inc.
Action: Volatility should be expected. Focus marketing on cleaning up old-crop bushels using targets around key chart points.
Mike Zuzolo, Global Commodity Analytics & Consulting LLC
“My overall reaction: USDA’s new assessment system of combining 'Multiple Data Inputs' brings a more accurate assessment based upon my client-subscriber survey. Their August estimates came within the margin of error to my forecast.
“And with that, USDA recognizes a tightening supply situation. This is contrary to the futures market built-into prices the past two weeks an increasing domestic supply situation in my view. An unwinding of the ‘bearish’ supply-side attitude is likely in my view, with corn leading since it had both the biggest yield decline and the smallest increase in harvested acres compared with soybeans. I’ll be looking for an unwinding of the ‘long soy-short corn’ mindset in the coming week(s) as well as the corn spreads tightening up as they had gotten to full-carry+ in my view. Commodity trading involves substantial risk of loss and is not suitable to all investors. The information provided is not meant to be advice to buy or sell commodities.” – Mike Zuzolo, founder, Global Commodity Analytics & Consulting LLC
ACTION: Explore ways to capitalize on the fact that USDA is recognizing the reality of tightening grain supplies.
Dan O’Brien, Kansas State University
“[Regarding the WASDE report], at first sight, I was surprised by the decline in average U.S. corn yields to 180.7 bpa, but I need to investigate more closely where the acreage changes are attributed to in both corn and soybeans. Sorghum production declines are not surprising, given the recent hot conditions in Kansas, and the decline in projected sorghum exports is likely a matter of just rebalancing the sorghum S-D balance. I really need to examine the state level average, yield and production numbers for these major crops to understand the full picture accurately.
“I note the lowering of the U.S. projected ending stocks even more, and take that as just upping the ante for the September USDA-NASS Crop Production and WASDE reports. With parts of the western Corn Belt weathering several days of rough 100+ degree days, it does get our attention!” – Dan O’Brien, professor, Kansas State University
ACTION: Hot weather forecasts later in August coupled with tightening U.S. grain stocks make USDA’s September WASDE report worth paying extra attention to.
Kaden Sweeney, AgMarket.Net
“Mid-to-late August is historically when we have seen the pre-harvest low in corn over the last few years. The price action after the August USDA reports would lead one to believe that we’ve already made that low. I would lean that way as well, but it is too early to say for certain yet. While it’s hard to leave today’s report more bearish than you might have been before, the market can trade in funny ways after reports, and a re-test of $4.60 or even $4.50 in December futures can’t be totally ruled out. However, I would view both as a buying opportunity.
“USDA adding acreage but still lowering carryout is a bullish sign, especially if demand does what we think it can do. USDA estimates 2026-27 corn demand to fall 325 million bushels from 2025-26. If in coming months demand improves to match or even exceed last year, or if yield continues to slip, carryout will begin to get interestingly low, and the market will have to take notice.” – Kaden Sweeney, hedging strategist, AgMarket.Net.
ACTION: For bushels already sold, I’m thinking about how to make those sales as strong as they can be. For example, if I have hedge-to-arrive contracts for bushels I plan to deliver at harvest, I still need to set the basis for those. Or if those bushels will go in a bin, I need to have a target in place to roll those HTAs into a deferred month.
I’m also thinking about re-ownership opportunities for bushels I’ve already priced. I believe we’re in a corn market that could get very interesting as the months unfold. What type of call options might you consider purchasing to achieve any possible upside we may have? I’m paying a lot of attention to the March call option strikes between 5.00 and 5.25.
Luiz Roque, Hedgepoint Global Markets
“The August WASDE report brought surprises for some of the key soybean and corn figures, particularly regarding the U.S. outlook. The increases in U.S. soybean and corn production for the 2026/27 season defied market expectations, which had pointed to production cuts due to lower yields. The USDA did confirm the decline in yields, but at the same time reported an unexpected increase in the planted areas for soybeans and corn, which resulted in higher production.
“In the case of soybeans, we believe the report had a slightly bearish tone for the market because, despite the increase in production, there was also very positive data on the demand side: the rise in U.S. crush volumes. Strong U.S. crush activity should continue to provide some support for the market, despite a possible record production.
“As for corn, despite slightly higher production, there was a significant increase in export demand, which led to lower stocks for the 2025/26 and 2026/27 marketing years. Given this, we consider the report to have had a slightly bullish tone. Strong international demand for U.S. soybeans should continue to provide support for the market.” – Luiz Roque, market intelligence coordinator, Hedgepoint Global Markets
Action: In the coming weeks, U.S. producers should keep a close eye on weather conditions to see whether these high production estimates are confirmed (or not). There is still room for adjustments to production figures, so extra caution is warranted.
Josh Linville, StoneX
“Obviously, the fertilizer markets could break either direction. If we suddenly see peace in the Strait of Hormuz, that would be an immense bearish event, even though that does not look likely today. My guess is the Iranians keep fighting until the U.S. midterms in an effort to sway the election left.
“For things like anhydrous ammonia, it is hard to see values lower before the fall. Manufacturers sold a tremendous amount of tons and are very comfortable and that is a win for them. I cannot remember a fill/fall program that was introduced and then pulled so quickly due to excessive demand. That tells me they are very comfortably sold, which means little reason to drop their values." – Josh Linville, vice president, fertilizer, StoneX
ACTION: The best thing farmers can do is keep emotion out of their farm marketing decision-making and to watch more often. There will be opportunities, although they might be fleeting. The more you watch the markets, the better suited you’ll be to see that opportunity when it does happen.