For decades, the methodology for writing this column has focused on addressing the basics of marketing. The goal has been to help create a commonsense framework for understanding market outlook technically and fundamentally. Yet, it’s clear there’s still a gap in the industry when it comes to the fundamental understanding of price discovery. Today, many rely on the use of other methods, such as crop insurance and guaranteed revenue programs, as a replacement for genuine risk management strategies.
Historical Context
An illustration of price discovery for soybeans serves as a prime example of the efficiency of our price discovery system, as seen in the past 25 years of market history. Around 2005, former President George W. Bush introduced a pseudo energy policy, launching the ethanol program based on the premise: “If you won’t buy our corn, we’ll burn it.”
This directly affected soybeans.
The incentive to plant corn led to fewer soybean acres, causing soybean prices to rise until enough acres were discovered to satisfy supply needs. This adjustment took seven years, factoring in challenges such as drought and Brazil’s entrance into the market.
Supply eventually exceeded demand, but it required soybeans to reach $17/bushel to drive expansion in South America. Afterward, the long uptrend broke, and prices receded to levels that would stimulate demand.
Notably, prices never returned to the previous $6 levels. Instead, a new price discovery process established a six-year trading range between $8 and $10, attempting to encourage demand.
On Aug. 31, 2020, the process began anew, influenced by supply constraints stemming from the droughts that occurred during 2011 and 2012.
During this new supply/demand realization, soybean prices tested $17 again, seeking to determine if this level was high enough to expand supply. The answer became clear.
At $17, nearly anyone could profitably plant soybeans, but that also took about seven months to confirm.
A long-term downtrend followed, amplified by an even steeper decline. On Aug. 31, 2024, a paradigm shift in global business practices was observed, preceding President Donald Trump’s election, tariff changes and the current conflict with Iran. Remarkably, soybeans rose by $2.60/bushel since Aug. 31, 2025. The media failed to anticipate this, focusing instead on minor issues.
Analysis of Soybean Price Trends
The price rally that’s occurred since Jan. 2, 2026, suggests a significant positive signal was in process if the long-term downtrend decline could be broken. Current price activity speaks positively, but sustaining a price above the downtrend is going to be essential as China-U.S. politics pose a roadblock and could thwart the positive price discovery in process.
Large speculator net positions at the bottom of the chart to the right (red for negative, blue for positive) correlate closely with price direction. The red 50-month moving average continued to be respected by price movements. Conventional wisdom has it that China — and other nations — had no economic incentive to buy U.S. soybeans.
Some analysts seem to have based their careers on this narrative, even as soybean prices reached highs that have not been seen since January 2024, which is when China initially began to avoid U.S. soybeans.
These arguments, however, overlooked one crucial point. For China, buying U.S. soybeans should be viewed as an investment, not an expense, with the added benefit that President Trump may reduce tariffs significantly — a demonstration of the “Art of the Deal.”
The current 10-million-metric-ton gap in U.S. soybean exports explains why President Trump is urging China to buy an additional 8 million metric tons this marketing year. If China complies, the U.S. could face a supply tightness which further supports the aforementioned paradigm shift.
Strategic Food Security
I have long written about the compelling argument for importing nations to maintain substantial grain reserves, rather than relying solely on the U.S. for their corn, soybeans and wheat. The concept of strategic food reserves is increasingly relevant amid today’s geopolitical and economic volatility.
Corn Market Timing and Speculative Activity
Some say market timing is impossible, but the chart above says otherwise. Combined with indicators that track cash — investment flows in and out of the market — and a keen understanding of fundamentals has proven effective in my career. I fear such analysis is no longer a science, but rather an art.
This shift is evident as risk management strategies focused on maximizing income have given way to increased production as a solution for improving income. The role of chief financial officer has shifted toward being a plant manager, as highlighted by media publications and land-grant university seminars that prioritize production, while I feel marketing receives too little attention.
