Top Tips on a Thursday
The grain markets are holding their breath. After hitting new highs earlier this month, corn and soybeans have settled into a fairly tight range, despite funds holding record long positions. That has more than a few people wondering if it’s the calm before the storm. Might the next moves be explosive in either direction?
The coming days are packed with potentially market-moving events: the highly anticipated Trump-Xi summit, the critical USDA Quarterly Grain Stocks Report on September 30th, and harvest progress hampered by waterlogged fields across the Corn Belt. Add geopolitical volatility in the Middle East and Black Sea, record diesel prices fueling export ban speculation, and an aggressive Federal Reserve tightening cycle, and you have a recipe for significant volatility.
What should you be watching for as September draws to a close? The latest edition of Top Tips offers advice on how to navigate the uncertainty ahead.
- Will the rising U.S. Dollar generate headwinds for export opportunities?
- To get the answers you need, you may need to ask the right questions (five in particular come to mind).
- PLUS: Are your immediate harvest needs squared away before the combines get rolling?
Andy Wold, Producers Hedge
“Since achieving new highs earlier this month, corn and soybeans have been very range bound with the funds holding an extremely long position. Three weeks ago, I wouldn’t have guessed that we would hold this tight of a range. The market is coiling up for another big move. Is it going to be a move to the upside or downside? That’s the million-dollar question. The next few days and weeks are full of anticipation with the much-awaited Xi/Trump meeting, the Quarterly Stocks report on the 30th, and a waterlogged farmer in the heart of the belt waiting to get into the field to see what he’s got.”
“On top of that, back and forth escalation and de-escalation in the Mid East and Black Sea and record high diesel prices getting much attention (talk of export bans) keeps us all guessing. This market is nearly impossible to predict, but corn basis feels heavy leading me to think we’ll see a larger Quarterly Stocks number in corn which in turn should increase carry-in for the new crop. In my opinion, we have already traded the anticipation of the Xi/Trump meeting and barring any new sales coming out of it, I don’t think there is enough fodder to feed the Bull in the short term and look for a short-term setback to fill some gaps. Longer term, the verdict is still out. I have a feeling this crop is diminishing in size for both corn and beans, but we’ll need the combines working to prove it. From a grain marketing perspective, I wouldn’t talk you out of making sales if you’re making money.”
– Andy Wold, commodity broker, grain merchandiser and owner, Producers Hedge
ACTION: Remember, bulls and bears make money, but pigs get slaughtered! (In other words, avoid greed.)
Matt Wiegand, FuturesOne
“We have continued to see rangebound action this week with test of both the lower end and upper end of the recent range as we continue to see harvest try to spool up along with the awaited summit with China. Early harvest pace is likely falling back to average with the wetter weather especially in the western belt, and specifically for soybeans we see impressive processor basis action as the ready beans have been delayed. Energy prices have dominated conversations as well with ethanol production sliding a bit as we see fall maintenance cycles underway, and speculation about diesel export bans fueling significant swings in the market. Early fall export shipping is off to a great start for corn and is slowly improving for beans, but more supply will be needed, while wheat continues to lag with reduced production this year. The dollar has pushed back above 100 on the index as well with the moves in the bond market this week, which could add to export headwinds if sustained.”
“As we move deeper into the fall, the near-term things to watch is positioning for the stocks report next Wednesday, and nearby basis as harvest gets rolling. Some soybean producers may have a great opportunity to capture short term premium is near a processor that is holding big basis premiums, and they can get to ready soybeans first. We have seen diesel prices start to ease, and an export ban will likely cause a short-term slump but would likely limit refinery runs shortly thereafter so securing any remaining harvest needs on a sharp break will be important.”
– Matt Weigand, risk management consultant, FuturesOne
ACTION: Now is the time to make sure immediate harvest needs are squared away.
Lauren Urbanczyk, Texas Hedge Risk Management
“This month, the corn and soybean markets have consolidated as funds manage their record long positions and await harvest progress. The highly anticipated Trump-Xi meeting took place this week, and next week the market awaits the Quarterly Grain Stocks Report. Farmers should make sure they are comfortable with their harvest logistics plan and have been in close contact with the merchandisers they plan to deliver to. Overcommunication will make everything run smoothly. I would recommend having a comfortable handle on how much grain is priced and how much is yet to be priced. I would look for volatility following the China meeting and Quarterly Grain Stocks Report as opportunities to get re-ownership in place.”
“Short-dated options provide great solutions for trading around different timeframes. The market has given us some great opportunities over the past 3 months and will continue to give us opportunities over the next 3 months. If you have a larger percentage of unpriced grain, you need some short-term downside protection. If you have a decent amount of forward contracts on the books, you need longer term re-ownership strategies.”
– Lauren Urbanczyk, cofounder, Texas Hedge Risk Management
ACTION: Know what your directional needs are so you can participate in the market when the opportunities come.
Naomi Blohm, Total Farm Marketing
“If you are deciding whether to sell the crop at harvest or store the crop into the 2027, here are a few questions to ask yourself, to help you make that decision.”
- What are you cash flow needs? Stop and think about upcoming bills that need to be paid and have a realistic look at your cash flow needs.
- Do you have a realistic grasp on the actual cost of storage? Whether storing the grain in bins at home, or at the elevator, there is a cost to store grain. Think about the nitty gritty details of interest costs, insurance cost, electricity costs, commercial storage costs, delayed price charges, and potential shrink charges.
- Are you in tune with your local cash basis levels? If storing the corn, you aren’t just hoping for higher futures prices, but you need to monitor your actual local basis levels, too.
- Understanding market carry. Is there any carry in the market in the deferred contracts? Is the market paying you to store that corn? Or does the market want your bushels now?
- Might it be worthwhile to consider re-ownership on paper? If you make the cash sale, should you re-own it on paper with a call option strategy just in case there is a market rally into 2027?
– Naomi Blohm, senior market adviser, Total Farm Marketing
ACTION: Make sure you find a strategy appropriate for your budget and risk tolerance.
David Whitcomb, Peak Trading Research
“The bar was set pretty high for the Trump-Xi meetings. Funds remain heavily long corn and soybeans and the market has already priced in a fairly constructive outcome. That creates real ‘buy-the-rumor, sell-the-fact’ risk if the talks fail to produce new, explicit agricultural purchase commitments or meaningful tariff relief. Crowded longs need constant fuel. If Trump-Xi produces vague language rather than explicit purchase commitments, there is real sell-the-news risk. If the summit underwhelms, Grain markets could sell off quickly as those long positions unwind.”
– David Whitcomb, Head of Research, Commodity Markets, Peak Trading Research
ACTION: Focus less on broad, positive headlines and more on whether we get explicit purchase commitments, tariff relief and follow-through in confirmed export sales.
Chase Koopmans, The Grain Ledger Rundown
“With Trump and Xi meeting, the bull side is real, but it’s mostly hope right now. China confirming the visit, plus an unconfirmed report of a six-month truce extension, has the market betting China buys more beans and maybe steps in on corn. The bear side: much of this optimism is already in the price. Beans have rallied above $13 behind China hopes, so a lot of good news was baked in before the summit even started.”
“Big picture, I still see a bull run as very possible later this year into the first part of 2027. The demand is real, the balance sheets are tight, and the South American weather story with a super El Niño is a genuine card still to play. I’m not letting go of that, and it’s why I stay positioned rather than sell everything.”
“But right in front of us, the short-term pressure is real and needs to be acknowledge. We just rallied hard on hope into a meeting, with the funds record long and harvest bearing down. If today delivers a big surprise, we go higher. But if it’s just about what everyone already expects, this market has a lot of premium to give back, and a sell-the-fact pullback is the bigger near-term risk.”
– Chase Koopmans, writer, The Grain Ledger Rundown
ACTION: Reward market strength on your terms, because you’re being handed a good price on optimism that may or may not pay off. Take a piece here if you’re behind, keep your protection on, and stay positioned for the bigger story later.
Tanner Ehmke, CoBank
“Soybean crush margins continue to moderate since peaking at record highs this summer. With rising soymeal prices and a softening in soybean oil prices, the soybean oil share has fallen to the lowest level since March as meal captures a greater portion of the processing value.”
“The rebound in U.S. exports to China is underpinning the rally in soybeans and eroding crush margins for processors despite the strength in soymeal prices. The arrival of a record soybean crop will weaken soybean basis in the weeks and months ahead, providing crushers greater opportunity for stronger margins this fall.”
“Farmers should be mindful that basis weakens seasonally with the arrival of the new crop but tends to strengthen over time. If farmers aren’t comfortable paying for storage to wait for stronger basis later, they can use a basis contract that locks in the current local basis while leaving futures open to be priced later. A forward cash contract could also be used to lock in both futures and basis simultaneously.”
– Tanner Ehmke, Lead Economist, Grains and Oilseeds, CoBank
ACTION: Before signing a contract, first check basis at multiple locations and compare historical trends, and don’t forget to factor transportation costs to each location.
Mark Knight, Farmer’s Keeper
“Corn futures are (little changed) on the week, however we did put in a triple top around $5.44 in the December contract. Funds retain a near-recent long. All things, considered, corn showed good resilience all things considered even with crude oil is down about $12 a barrel the past week. Rains in Iowa continue to pop up, threatening to delay harvest even further. Trump looks like he's desperately trying to end the two wars and bring oil prices down dramatically for the November elections. With the big Trump/Xi meeting, don't be surprised if not much is mentioned on the grain side, as they have a ton of other things to talk about.”
“In soybeans, China has bought about half of their expected 25 MMT thus far and the USDA doesn't have that entire amount factored into its estimates yet. So a hint at getting the full 25 MMT or more bought, would likely send us higher. Funds remain near record long. Diesel prices remain out of control, which should provide some support on any breaks. I feel like we're in a great spot with a ton of protection on should this market fall apart.”
– Mark Knight, Senior Analyst, Farmer’s Keeper
ACTION: In corn, buy the December 510 put and sell the 580 call for 5 cents; in soybeans, buy the December 1300 put and sell the 1400 call for 5 cents.
Matthew Pot, Grain Perspectives Inc.
“China’s President Xi is in the U.S. for a visit, and once that is behind us, keep an eye on the outside markets. Headlines around higher diesel prices and inflation are constant. There are plenty of geopolitical events and political leaders driving those headlines - from the Black Sea to the Strait of Hormuz. But Federal Reserve Chair Kevin Warsh has made his stance clear: Inflation remains too high, and the central bank has more work to do.”
“Rate-hike probabilities priced into the markets are moving hand in hand with the broader energy crunch. Last week, the Federal Reserve hiked rates by 25 basis points. More importantly, the probability of three more hikes by March 2027 has surged past 60%, with more than a 20% probability of four (at time of writing). A month ago, the expectation for just one more hike in that same window was below 50%. That is a massive shift in monetary policy expectations in a very short period.”
“Historically, aggressive monetary tightening is not an environment where speculative funds hold massive long positions in the grain sector. Yet, fundamentally, corn and soybeans are tighter. If China clears 25 million metric tons and El Niño creates production hurdles in South America, those balance sheets tighten further. The domestic corn balance sheet is already hovering below 10% stocks-to-use, signaling underlying tightness. Next week, on the 30th, we get the USDA’s quarterly stocks and final production numbers.”
“Grain marketers find themselves caught between big-picture macro headlines - the Fed and inflation - and hard fundamentals, including USDA reports and export demand. This fall, central bank announcements deserve just as much screen time as USDA data. Recent market behavior has followed adjusted seasonal expectations for pressure heading into October. In politically and macro-driven markets, absolute certainty is a myth. But looking at the moving parts, volatility cuts both ways.”
– Matthew Pot, founder, Grain Perspectives, Inc.
ACTION: Keep a close eye on FedWatch rate probabilities – any fundamental rallies in grains occurring alongside rising rate-hike expectations in the coming months should be viewed as selling opportunities.
Tim Strunk, AgMarket.Net
“Every operation is a little bit different as far as their timing on when they sell calves, where they sell calves, what they feel are profitable levels, which in the cow-calf sector is often harder to determine than it is for a backgrounder or a cattle feeder that's always working on a margin. For the cow guy, it's a lot more difficult. You don't have a fixed cost that you're working with.”
“It’s not the best time for the cattle feeder, but a pretty good time for the guy that's selling them that calf or that feeder. The cattle feeder that is buying cattle is going to need a $20, $30, $40 rally in live cattle to have a chance of breaking even. So, the cow-calf producer, I think, is still in the driver's seat. And I think they have to continue to take advantage of that. It can turn on a dime.”
“There’s a lot of things that point to these prices being pretty well supported. But as we've proven time and time again, a lot of things can come out of left field when we least expect it to really derail us, even if it's just short term. But if that's the timeframe when you sell your calves, it's a pretty big deal. While there's nothing that jumps out at me as saying “Hey, we’ve got to make a move right now,” I think it's important to not get complacent either as far as risk management goes.”
– Tim Strunk, risk management specialist, AgMarket.Net
ACTION: Block out the noise. Keep the wheels on your operation.
Mike Zuzolo, Global Commodity Analytics & Consulting LLC
“It seems to me that heading into the U.S.-China trade summit, the ‘demand bull’ needs some good news as both harvest progress and yields remain tough to pin-down across the central corn-belt. Last week’s Fed rate hike, coupled with increased pressure on prices from the policy side (think diesel export ban and peace talks between Russia and Ukraine, etc.), has helped usher in a new two-month high in the U.S. Dollar Index. This is a headwind we can do without. 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: Concrete U.S. export numbers and a reversal in the U.S. Dollar are the two biggest items on my ‘wish-list’ after the U.S.-China summit concludes.