Top Tips on a Thursday
Corn prices above $5 per bushel? Soybeans above $12? Winter wheat trending $7.50 higher? We still hold hope for better, but we’ve certainly seen worse.
Rallies unfolding earlier in August still require some smart decision making, however. That’s because harvest pressure is looming for corn and soybeans, and while the upcoming September WASDE report could add bullish fuel to the fire, that is certainly no guarantee. Keep reading to see what industry experts recommend watching in the near future in the latest edition of Top Tips.
- Demand is taking the wheel in grain markets – how high is up?
- Why you should “embrace change” in your balance sheet and reward rallies
- PLUS: The “key unknown” in the U.S. soybean market
Mike Zuzolo, Global Commodity Analytics & Consulting LLC
“Wheat-led limit-up moves this week in grains is giving me the impression that the futures trade is feeling more like 2022, in that the Black Sea grain corridor is clearly shut due to conflict between Russia and Ukraine. The weather/geopolitical supply-driven price-action since the August WASDE Report now appears to be in demand-rationing mode — finally.
“I’m suggesting to my clients and subscribers to be ready for a handoff from supply-led to demand-led if the September WASDE doesn’t confirm continued shrinking supplies. This is especially the case since we are seeing heightened trade frictions, and September could be a big month with two of our major agriculture importers: Canada and China. 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: Stay tuned to see if the September WASDE report confirms hints of shrinking supplies, which could keep the bulls running.
Dan O’Brien, Kansas State University
“With the recent Pro Farmer crop tour projecting a much lower U.S. corn yield than the USDA August crop production report, the September corn yield and production forecasts are the most anticipated new information coming out of USDA’s September WADE. The market will also be watching and very reactive to any significant move lower in the projected 2026-27 marketing year: U.S. corn ending stocks down to 1.5 billion bushels, along with any decline in U.S. corn ending stocks-to-use below 10%.
“If U.S. corn ending stocks for 2026-27 decline sharply, then U.S. season-average corn prices could increase sharply by 10-25 cents per bushel. In addition, the pace of U.S. corn exports and ethanol crush will continue to be monitored on a weekly basis to monitor the strength of U.S. corn usage.
“The key unknown in the U.S. soybean market is whether China will continue to purchase soybeans from the U.S. to fulfill its earlier commitment of purchasing 25 MMT in the 2026 calendar year. Right now, China has purchased approximately 12.5-plus MMT in 2026. So, if China comes aggressively to the U.S. for soybean import purchases at or immediately after the U.S. soybean harvest, then that would likely provide strong support for the U.S. soybean market prices from September through November. El Nino forecasts are perhaps the major market unknown or wild card factor in the coming months because it is possible that South America soybean planting may be affected in the last 2-3 months of 2026.” – Dan O’Brien, professor, Kansas State University
ACTION: Pay close attention to domestic use and export trends leading up to the September WASDE report.
Brady Huck, Empower Ag Trading
“I wouldn’t want to put a limit on how high grain markets could go. But we have to ask ourselves, at what point will we price ourselves out of demand? We don’t want to overestimate how strong demand is for U.S. crops. The market's job is to manage supply and demand. And as prices go higher and higher, we will ration supply.
“From a producer perspective, you’ve got to reward this rally, even if you get to a point of exhaustion. This move is attracting farmer selling. This market is reminiscent of the 2020-22 timeframe where we saw some exhaustion of sellers in the market. For the farmer, it comes down to re-ownership. Re-owning sales you make with call options enables you to confidently execute in the face of such a strong rally. Keep going! Embrace the change to your balance sheet and defend it.” – Brady Huck, Principal and Advisor, Empower Ag Trading
ACTION: Time is your friend for the market to move and things to change. Consider buying March corn call options against cash sales you make to reward this rally (spending 15-25 cents).
Matt Wiegand, FuturesOne
“Trade has continued to accelerate to new highs for corn, soybeans and wheat this week with yield concerns and Black Sea disruption concerns continue to help fresh buying pile into the market. Trade has shifted to being technically heavily overbought (and the opposite for cattle) to a level that is typically hard sustain indefinity, which may start to open the door for a short-term correction along with the September contracts going into delivery and the end of the month being ripe for long profit taking.
“Early harvest will also start pushing fresh corn into buyers' hands with early soybeans to come soon. Demand has held up well on the ethanol and export front, but user margins will start to compress if we continue to extend gains. The dollar has remained at the lower end of the range, which continues to add some residual support.
“Into September, the biggest short-term focus will remain making sure any harvest needs are met as far as bushels that will need to go to town along with cash flow needs that need to be met. There's a rare opportunity to wrap up needed coverage at contract highs in August. Rising 2027 crop year prices should be watched to lock in some early margins to build a marketing base into next year. The diesel squeeze has continued but remaining coverage will be need to be secured soon ahead of fall refinery maintenance season with the next good seasonal window out to December.” – Matt Weigand, risk management consultant, FuturesOne
ACTION: Interested in longer term re-ownership? Now is that time to look at strategies that can be put into place when harvest pressure builds.”
Greg Ibendahl, Kansas State University
“Corn’s national probability of finishing below trend yields has climbed in each of the last three weeks: 65% two weeks ago, 66% last week and 67% this week. North Dakota remains the most troubled state on the map, back up to 93% after a brief improvement two weeks ago, and Wisconsin has emerged as a genuine second concern, climbing from 53% to 61% to 66% over the same span. Kansas, Texas and South Dakota all sit in the upper 70s to low 80s and have moved higher, as well.
“Soybeans’ national probability has been steadier: 41% two weeks ago, 41% last week and 43% this week, a smaller move than corn but a real uptick after holding flat. The states driving it are, notably, the same two states causing trouble in corn: North Dakota, up from 69% to 80%, and Wisconsin, up from 72% to 83%, now the single highest reading on the soybean map.
“North Dakota and Wisconsin both deteriorating in corn and in soybeans at the same time is worth flagging on its own. It suggests whatever is driving those two states’ conditions is showing up across both crops rather than being specific to one.” – Greg Ibendahl, Agricultural Economist, Kansas State University
ACTION ITEM: Pay close attention to the Sept. 11 USDA reports to see if any yield revisions come close to the Pro Farmer estimates. If not, this price rally might be over.
David Widmar, Agricultural Economic Insights
“Precision and confidence are easily substituted in decision making. For instance, you can project next year’s production costs to the penny (precision), but farm managers realize those projections are not confident forecasts of input costs and commodity prices 6-12 months in advance.
“This lesson also applies to yield estimates and marketing decisions. A 2-bushel change in the U.S. corn yield at this point in the year would certainly move prices, but on a 180-bushel crop, that is only 1.1%. Expecting the national yield estimate to be accurate within 2 bushels implies nearly 99% precision. The gap between market sensitivity and forecast precision can be frustrating.” – David Widmar, ag economist, Agricultural Economic Insights
ACTION: Identify two areas where your own expectations imply more confidence than the data support.
Mike Castle, StoneX
“The market’s focus is shifting away from the supply side of the equation back to what, in my opinion, is the bigger driving factor: demand. While markets have certainly developed some amount of headline fatigue amid the ongoing geopolitical escalations in the Middle East and Black Sea, the resulting energy shock from these conflicts is driving a strong incentive for biofuel adoption globally. The domestic corn and soybean balance sheets both reflect this story, but in different ways.
“On the corn side, Brazil’s reliance on energy imports has allowed its ethanol boom to gain steam in the wake of this energy shock, translating into stronger domestic demand and thus less available supply for the export market which, coupled with disruptions to Ukrainian exports, is shifting more demand to the U.S. On the soybean side, the massive expansion in domestic crush fueled by our new biofuel mandates puts the U.S. in a similar position of having less excess supply available for the export market, just as Chinese buyers return to the U.S. soybeans." – Mike Castle, Senior Commodities Economist, StoneX
ACTION: Watch near-term futures price action, because seeing both corn and soybeans take out previous highs this week is indicative of how traders view potential for additional upside.