March Madness in the grain markets normally focuses on Prospective Plantings reports due at the end of the month. But a far more obscure dataset out weeks before could eventually have a much greater impact on prices into next year.
To be sure, acreage is important, but so is the other variable in the production formula: yields. In fact, yield explains more of the variance in production than acreage for both crops, especially corn.
Of course, with nary a kernel in the ground so far, 2026 yields are anybody’s guess. But yields depend on growing season weather, and the outlook for the growing season could hinge on a well-known pattern, the El Nino cycle of ocean temperatures and atmospheric currents in the equatorial Pacific.
The next updates to the El Nino cycle are due the week of March 12, with forecasters in Japan and the U.S. weighing in at the National Weather Service Climate Prediction Center. If current trends continue, La Nina cooling is expected to give way to neutral conditions, with another El Nino developing this fall.
Beware El Nino
While La Nina is associated with some of the biggest droughts in the U.S., weather tends to be better for yields when El Nino prevails. There’s no distinct pattern for yields in El Nino neutral yields. But when neutral conditions give way to El Nino by fall, corn and soybean yields in the U.S. tend to improve, producing smaller rallies.
So, watch those predictions to get ahead of the end of month reports. The prospect of better yields and smaller rallies suggests growers should be ready to jump on surprises in the acreage reports out March 31. The government’s track record in these estimates favors corn rallies a little historically, but results aren’t far from toss-up levels in both crops.
Southern Iowa cash prices are the metric USDA uses in these summaries, which are due to be updated March 11 in the USDA Crop Production and Grain Stocks reports. Since 1984, corn prices were higher 55% of the time the day after the report, and 50% the week after. Losses, though a little less frequent, were greater than average gains, especially the day after reports, when the average downturn doubled the average from years with gains. The same trend was true a week after the reports, with gains averaging 43 cents and losses hitting 65 cents.
Down years were more prevalent in soybeans, with down years outnumbering those with gains. But average changes favored up years. So, soybeans rose only 46% of the time both the day and week after the report. But gains in up years averaged 54 cents, while losses just three cents. A week after the reports, soybeans averaged 62 cents in gains, compared to losses averaging 49 cents in down years.
Protection from chaos
Most years the trend seen the day after the reports holds for the following week. But this isn’t always the case either. Last year both corn and soybeans posted gains the day after the March tallies but reversed lower a week later. Corn gained 4 cents the day after the reports but was down 8 cents a week later.
Moves in soybeans were even greater: Up 24.5 cents the day after but down 51 cents a week after.
Years with large variations are typically those with unusual fundamentals of supply and demand. For example, changes were large for both crops around the historic 2012 drought and 2008-09 “Great Financial Crisis.” But last year moves in corn were small, while tariff and trade uncertainty spiked moves in the soybean market that were much larger than normal.
Some of those same tensions could be in play this year, though both markets are fairly rangebound. Nearby corn is near the top of its 70-cent range for the past year, while soybeans take aim at two-year highs in their own $2.50 range. Moves in range-bound markets tend to be violent, so make sure you’re ready for both extremes if necessary.
