Top Tips on a Thursday
Grain markets are caught in a bit of a tug-of-war between strong domestic and global demand versus mounting harvest pressure. But the biggest relevant question this week: Will Friday’s World Agricultural Supply and Demand Estimates report tip the scales toward the bulls or bears?
“Demand has been amazing for grains, for U.S. grains, especially for corn and beans. We don't see that slowing down,” said Tyler Schau, partner and CFO at AgMarket.Net. “The only thing that would slow that down is price moving higher. But the global market has this voracious appetite, partly fueled by low commodity prices over the last several years for grains — couple in higher energy prices that just boost that demand even more.”
Yet Schau warns that market conditions “could change on a dime,” which is exactly why having a disciplined marketing plan matters now more than ever. He and other experts weighed in for this week’s edition of Top Tips. Keep reading to see what action items you may want to consider.
- Make educated, measured actions rather than spur-of-the-moment decisions.
- Is it reasonable to expect a fairly choppy market over the next 30 to 60 days?
- Plus: Making sure fuel needs are covered into October will remain important.
Matthew Pot, Grain Perspectives Inc.
“As we head into tomorrow’s USDA report, market sentiment has diverged. During the rally and subsequent consolidation over the past few weeks, bullish sentiment built in the corn market but has since relaxed. The crowd is more mixed in its opinion but still leans bullish.
“Technically, the soybean market is slightly overbought, while corn is approaching overbought again. Both signals moved lower during the consolidation. At the same time, estimates for the USDA report have been released, with corn yield estimates particularly wide. Reuters’ estimates range from 173.2 to 182.9 bushels per acre, with an average estimate of 178.2 bushels. That makes the ending-stocks musical chairs even more interesting, as old-crop demand could see adjustments alongside changes to new-crop demand. Add crude oil above $100 a barrel and growing uncertainty around the Strait of Hormuz, and there is no shortage of information for the market to digest.
“And this is all happening while funds are holding record outright long positions in corn and soybeans, with the market also pricing in a 70% probability that the Federal Reserve hikes rates next Wednesday. That creates a case where even bullish USDA news could produce a capped rally as funds take profits from already profitable positions. That is a lot for producers to digest, but it is also a lot for fund managers to digest while sitting on profitable trades in both corn and soybeans. No matter what the USDA says tomorrow, the journey toward price rationing is never a straight line.”
— Matthew Pot, founder, Grain Perspectives Inc.
ACTION: Don’t overcomplicate the process. Make small sales as opportunities arise to avoid panic selling after sudden market changes.
Tyler Schau, AgMarket.net
“Demand has been amazing for grains, for U.S. grains, especially for corn and beans. We don't see that slowing down. The only thing that would slow that down is price moving higher. But the global market has this voracious appetite, partly fueled by low commodity prices over the last several years for grains. Couple in higher energy prices that just boost that demand even more. So, there is a scenario where we could see sustained price rallies or some higher prices. But a lot of those things could change on a dime, and that's exactly why we’re talking about making some sales.
“If you need to move some grain off the combine, we can look at some re-ownership strategies. But put a timeline on it, have a plan, have an action plan laid out for if we hit certain price targets, certain time periods, where we actually make a decision and do something. And make it an educated, measured action, not a spur of the moment.”
— Tyler Schau, partner and CFO, AgMarket.Net
ACTION: Have a harvest plan for marketing your grain — even if you plan to sell some off the combine.
Matthew Kruse, Commstock Investments
“While I believe grain prices can keep moving higher longer term, my bigger concern is that everyone is all ‘bulled’ up at this point with managed money in record long positions. Just because the market is bullish does not mean it will move in a straight line higher. We still have harvest pressure ahead, and USDA reports may or may not align with bullish expectations. If the September report does not cut yield estimates as much as expected, that may temper the rally.
“Watch basis potentially strengthen as harvest progresses as buyers make a last-ditch effort to secure supply before farmers store the rest away. At that point, it will be much more difficult to get them to part with it after it goes in the bin. Depending on yield, some growers may be seeing as much as $200-per-acre profit at these levels. For those that have already made some sales, we will look to re-own on paper but on a pullback. While most of the focus is on grain sales, we also remind farmers that if prices continue to climb, input costs will likely be more expensive as well. Therefore, it’s also beneficial to potentially lock in fertilizer or other input costs next season as those markets look to take a share of the profits.”
— Matthew Kruse, president, Commstock Investments
ACTION: If farmers are undersold, we still think they are profitable at these price levels and recommend advancing sales.
Matt Wiegand, FuturesOne
“As we head towards the Friday September WASDE report, we have seen overbought conditions start to ease with long liquidation by funds to take profits along with an overhang from negative outside markets as bond yields rise and the stock market wobbles. Early harvest pressure will continue to expand short term with corn rated as 5% complete, with further expansion likely to continue at a rising clip with soybeans to start soon, as well with maturity solidly ahead of the five-year average. Fresh export business on soybeans continues to be confirmed as well with corn a bit more limited as we head into the key fall shipping season. Rising energy prices continue to buttress biofuels margins as well, which should help fortify processer basis into harvest.
“As harvest begins, the main things to watch will remain nearby basis opportunities on hedged bushels to secure near-term cash needs, along with decent carry into spring to help on-farm storage to pay for itself as we can look to roll hedges to pick up carry along with potential winter basis gains. 2027 row crop values have remained elevated as well to watch for starting points for next year’s crops, with wheat easing back a bit more from the highs but still in a position to compete better for acres on the Plains. Input wise, fall fertilizer offers will likely firm as needs are secured for fall application, and short-term diesel prices could see further increases to volatility through fall maintenance season, so making sure fuel needs are covered into October will remain important.”
— Matt Weigand, risk management consultant, FuturesOne
ACTION: Beware harvest pressure building later this month, along with volatile diesel prices.
William Osnato, Barchart
“Barchart's Corn Yield Model fell as low as the current USDA estimate mid-August, then climbed over the last two weeks. The current forecast is in line with average NDVI readings and near-normal crop condition ratings. Traders looking for bull market continuation will need a new story. With speculative length stretched, watch for a profit-taking correction. When momentum stalls, quantitative strategies start to exit positions. The price signals can reverse quickly, particularly with a market-moving USDA reports Friday.”
— William Osnato, director of commodity data research and analysis, Barchart
ACTION: Farmers should take advantage of the high prices and market some of their crop.
Lauren Urbanczyk, Texas Hedge Risk Management
“This week we will see a potentially volatile WASDE report. The funds have a record long position, which tells us they believe in the bullish case for corn, beans and the entire grain complex. Given the strong El Niño patterns, strong export demand, changing geopolitical tides and crop condition ratings, there is a strong case to be made for continued upside in corn.
“However, we should also not be surprised if we see funds take some profits on their longs going into Friday’s WASDE report or thereafter. So, producers should make sure they are comfortable with the percentages they have sold and look to secure puts on open production. I like buying upside on 2026 corn while starting to sell 2027 production through the following strategy: buying December ’26 corn $5.50-to-$6 call spreads and selling December ’27 short-dated (November ’26 expiry) $5.50 calls. The net option cost for this strategy is a penny, with potential unlimited risk via the short 2027 call. However, since all legs share the same expiration dates, this makes it an easy hedge strategy to manage.
“I expect a fairly choppy market over the next 30 to 60 days with plenty of opportunity for back-and-forth price action. When options are used correctly, this can be to your advantage as a hedger! Spend some time learning how puts and calls work, and how it works when you both buy and sell the options. If you have any questions, feel free to reach out and ask.”
— Lauren Urbanczyk, cofounder, Texas Hedge Risk Management
ACTION: Make sure you are comfortable with the percentages you have sold and look to secure puts on open production.
Luiz Fernando G. Roque, Hedgepoint Global Markets
“The September WASDE report may bring significant revisions to key soybean and corn figures, with potential implications for market trends. For corn, we believe the USDA is likely to confirm cuts to U.S. production and stocks. The key question is: How large will these cuts be? We believe that cuts exceeding 150 million bushels in production and stocks could provide support for corn futures. Cuts of under 150 million bushels may provide limited support or even pave the way for temporary price corrections. However, even if the cuts are small, we do not expect a shift in the direction of the corn market, which should continue to find support from strong demand and lower stocks.
“For soybeans, the market is uncertain whether the USDA will reduce, maintain or even increase U.S. production. Generally, we expect the USDA to report a small production cut of around 20 million bushels, which would still keep production at a record level and stocks at levels similar to current estimates. If this is confirmed, the report should have little impact on the market. However, we believe it is possible USDA will report a larger cut in production, given crop conditions remain significantly worse than last year. In that case, if the cut exceeds 20 million bushels in both production and stocks, we may see the market gain some momentum. However, if the USDA raises U.S. production and stock estimates, we may see a significant correction.”
— Luiz Fernando G. Roque, market intelligence analyst, Hedgepoint Global Markets
ACTION: We believe there is a greater likelihood of a bullish report for both commodities, especially for corn, which means U.S. producers should watch for pricing opportunities.
Mike Downey, UnCommon Farms
“Family farm succession planning is complicated in many ways, but the hardest part may be getting a conversation started among siblings, parents and other stakeholders. Good communication is vital. A good way to get a transition conversation started is to identify and tackle head-on a particular fear or challenge that’s been getting in the way.”
“From there, you should just create a safe environment and have a meeting where you’re not making any decisions. Then, everyone puts pen to paper. I really like to focus on where we’re headed and have everyone write down what a successful outcome looks like. Then, just go around the table and have a conversation and get alignment. Once we get that alignment, we can get further into the conversation.”
— Mike Downey, manager of succession planning, UnCommon Farms.
ACTION: Identify individual fears or challenges and then arrange a low-pressure gathering where each stakeholder has an opportunity to be heard.