Wow, what a volatile time we are experiencing right now! Whether spurred by political unrest in the Middle East, changing Chinese grain demand or threatening crop conditions, grain prices are on the move. Since the August USDA report two weeks ago, December ‘26 corn has rallied 60 cents, and it has rallied 95 cents since the June 30 acreage report.
August is the time frame when we normally set the marketing year low and wonder why we are holding on to that last percentage of old crop. But not this year. This year we get to embrace something positive before harvest starts. So be thankful that the world is finally paying attention to our increasing corn demand and what appears to be a possible hiccup in 2026 corn production. You see? The glass is half full. Marketing isn’t always a bad thing.
This rally has the potential to get even more interesting before it’s all said and done. Pro Farmer shocked the trade last week with a U.S. corn yield estimate of 173.2 bushels per acre. That number is 7% below last year’s USDA final yield of 186.5 bpa, but it is in line with what scouts consistently found across each state they sampled.
Historically, USDA has posted a final average yield 3 to 4 bpa higher than Pro Farmer. So, we can follow historical data and use a 177 bpa as the average U.S. yield (leaving all other factors alone). We could then realistically be looking at a sub-1.5 billion-bushel carryout. Stocks-to-use in that case would be somewhere around 8% to 9%. The last time we were that tight in the U.S. was 2021-22. Do you remember what our corn was worth during those two years? Try $6 or so.
Don’t wait on higher prices
That being said, it is usually not in our best interest to sit back and do nothing. We still have a job to do as responsible risk managers. So, please throw out the ideas of “Texas Hedging” and loading up on “Courage Calls” to hit it big in 2026!
We have many good marketing tools that will protect downside while still giving the flexibility to participate in upside if or when it happens. These are the tools that both your banker and your family are proud of you for using. My favorite is the simple put option. And I think now is the perfect time to use it! Here’s my answers to the three most common questions:
- Not sure about your crop size? No problem. Puts aren’t tied to production like a forward sales contract at the elevator.
- You don’t like margin calls? Simply place a floor under the market. The only price risk you assume is the up-front premium you pay when you buy them.
- What if the market keeps rallying? Excellent. That’s what we hope happens! With puts you have the option to roll that floor higher and “stair-step” behind the market. This allows you to increase your bottom-line price as the market improves. We call puts a defensively bullish position — and we all like to be bullish. Right?
Consider selling 2027
Another item that is important right now is focusing some of your attention on the 2027 market. I know many of you are meeting with input dealers and getting prices set for next year. Don’t forget to consider covering those costs when you lock them in.
This rally may make it difficult to pull the trigger selling because we get very emotional about it. That’s normal. But try your best to look ahead and remember the years that have reversed course. I’m talking about years like 2008, 2012 and 2021. When was the best time to lock in the following year’s prices? It was when the current year felt like there was no way it could ever drop again. It was when everyone you talked to was bullish about prices screaming higher.
Push yourself to market both 2026 and 2027 at the same time. Just make sure to stay flexible and keep some upside potential. None of us will pick the top of this current rally. The key to taking advantage of it lies in how we deal with all the noise and chaos that surrounds it.