Futures Prices

Corn Futures Drop Following Surprise Yield Increase in January USDA Report

Mon, 12 Jan 2026 18:04:28 GMT

The January USDA reports are the biggest of the season with final crop production for the previous year, world supply and demand estimates, quarterly stocks and winter wheat seedings for the new season. Average trade guesses ahead of Monday indicated only minor adjustments to the annual reports that are historically a huge market mover.

This year, all eyes were on final yields and production, specifically corn, and USDA provided several bearish surprises.

Corn Crop Still Big

USDA didn’t back off its big corn crop forecast, putting its final 2025 production at 17 billion bushels. The agency raised its final yield estimates from November to 186.5 bu. per acre. ( Ahead of the report , the trade was expecting a 2 bu. cut to 184 bu. per acre.) The gains also include raising acreage 4.5 million above the June survey, which analysts say is unprecedented. The final harvest area is now estimated at 91.25 million acres.

In January 2026, USDA released record corn yield and production numbers.

(USDA/Lindsey Pound)

The increase in production also lifted U.S. ending stocks to 2.227 billion bushels. That’s up from 2.029 in December 2025 and well above traded estimates. Corn futures markets sank double digits immediately following the release.

“That’s just a massive crop, 186.5 for yield, says Matt Bennett with AgMarket.Net. “I take issue with the higher corn yield considering the heavy disease pressure in parts of the Corn Belt.
A lot of people, of course, with recency bias and all the issues felt like [USDA] could take this yield down a fair amount. I would say it was definitely a shock for most people.”

USDA raised total corn usage to a record 16.4 billion bushels.

“Exports have been nothing short of incredible so far. As far as sales are concerned, we’ve actually had good shipments, but USDA left exports at 3.2, and then actually took up feed and residual usage,” Bennett adds.

Soybean Numbers Remain Steady

On the soybean side of the aisle, USDA left yields basically unchanged from the November report at an estimated 53 bu. per acre. However it did raise overall production to 4.262 billion bushels.

USDA left soybean yields basically unchanged from the November report but did raise overall production.

(USDA/Lindsey Pound)

Ahead of the report , the average trade guess lowered yield by 0.3 bu. to 52.7 bu. per acre. Jerry Gulke thought President Trump’s goal of keeping food prices low and the fact USDA is providing Farmer Bridge Assistance might dictate a bearish slant.

Ending stocks are beginning the new year at 350 million bushels. That’s higher than December’s estimates based on smaller expected exports. The increase in production and lack of exports drove futures lower following the report.

“Essentially there were minor changes [for soybeans] other than exports, which went down 60 million bushels,” Bennett explains. “You’ve got to assume it’s because USDA took that Brazil crop up to 178. It’s something I think they lagged in doing. However, a 350 million bushels soybean carryout is still tight and with exports sales running 30% behind last year, it may be a gift for now.”

Winter Wheat Seedings Down

Farmers found a reason to plant more winter wheat than previously expected at 32.99 million acres. That’s well below last year’s crop planted on 33.15 million acres but larger than the trade had anticipated. Hard red winter wheat was nearly steady with last year at 23.50 million acres. Soft red winter wheat also near a year ago at 6.14 million acres while white winter wheat plantings fell to 3.36 million acres.

Click here to hear how Arlan Suderman, chief commodities economist with StoneX, breaks down the price action following the report.

Farmers Face Budget Squeeze And Balance Sheet Challenges—Echoes Of A Decade Ago

Tue, 30 Dec 2025 21:12:38 GMT

If heading into 2026 feels a little like déjà vu, you’re picking up the same vibes Chris Barron, president and CEO of Iowa-based Ag View Solutions, is experiencing. He believes the next couple of years will echo the last big downturn farmers weathered a decade ago.

“It’s kind of scary that 2025, ’26 and ’27 look essentially like a repeat of 2015, ’16 and ’17,” Barron says. “If you remember that time frame and made it through, buckle down because I think we’re going there again.”

He says one of the clearest signals farmers are about to experience a repeat of a decade ago is based on the 2026 cost-of-production data from Ag View Solutions’ clients, who are based in 23 U.S. states and three Canadian provinces:

Soybeans: About $11.87 per bushel based on a 65-bu. average yield
Corn: About $4.69 per bushel (before basis) on a 223-bu. average, with many growers needing at least $4.85.

Some growers raising non-GMO seed beans or getting premium contracts can still make soybeans compete. But for many farms, soybeans are the weak link in the current economic cycle.

Right now, Ag View Solutions clients are expected to plant roughly 62% of their acres to corn and 38% to soybeans for 2026 — essentially the same as 2025. Barron says he doesn’t expect many acres to shift away from this mix to more soybeans “unless something really changes.”

Given current price relationships and crop insurance guarantees, Ag View Solutions data shows about a $50-per-acre advantage to corn over soybeans for the year ahead. Even if the dollars trend lower, he says corn often pencils out better because of gross revenue and risk management tools.

More Cost Pressures Heading Into 2026

It’s no secret production costs are increasing heading into the next season. Some of the key factors include:

Overhead costs (what Barron calls ‘”return to management”) for family and employee expenses, including phones, fuel and business-paid personal expenses, are up nearly 5%. After the past year or two of what Barron describes as hard belt-tightening, he says deferred spending is “snapping back” at higher levels.

Land rents are holding mostly steady, supported by higher property taxes and outside investor demand.

Interest expense is climbing as operating lines grow.

Fertilizer costs are a mixed bag. On corn, fertilizer costs are up about 7%, even though Barron believes most farms are staying with removal-rate applications. On soybeans, he says fertility costs will be lower, mainly because growers are putting less fertilizer on their bean acres and leaning harder on corn nutrients.

Machinery and equipment costs are also inching higher for the year ahead.

This Is Not A Repeat Of The 1980s

Despite the “red” many farmers will see on their spreadsheets in the year ahead, Barron says the current period is not a repeat of the 1980s farm crisis, for two key reasons:

Farmer equity is strong. Debt-to-asset ratios remain healthy for many U.S. growers, even if cash is tight.
Many farmer exits are voluntary. Today, many farmers are choosing to retire or scale back in order to protect equity.

Barron offers a recent example: “I got a call the other day on 7,000 acres, a 45-year-old farmer saying, ‘I’m not going to do this anymore. I’ve got a $5 million equity position, and I’m not going to go for a couple more years and chew away another million dollars. I’m just going to be done.’”

Strategies for the Current Climate

To survive — and potentially thrive — in this “repeat” cycle, Barron suggests focusing on these four areas in the year ahead:

Do the high-dollar work. Barron says the “$500-an-hour” work is crunching numbers in the farm office. “Know your true costs, stress-test budgets, analyze each profit center. A few hours spent with good numbers can be worth far more than another round in the tractor,” he says.
Protect yield. He advises against cutting seed, chemistry or other inputs that protect or enhance yield “just to save a few cents per bushel.”
Right-size your operation. Barron says some of the most successful turnarounds he’s seen with operations lately have come when farmers “right-sizes” — they’re doing less, but doing it better — instead of trying to be everything to everyone.
Use collaborative models. Barron says he is seeing more farmers share equipment and labor with their neighbors to spread fixed costs without extra capital.

Opportunity Will Still Knock

During a Top Producer podcast, Barron told Host Paul Neiffer that the tight times ahead will create new land-rent opportunities for some farmers who want to expand. What commonly happens when margins get tight is some farmers pull back, and that’s when expansion possibilities open up for others.

“We’ve had numerous clients call us about opportunities to rent land and not like in small amounts. When times are tight and when things aren’t good, that’s when these opportunities present themselves,” he says.

Barron’s message for those farmers in expansion mode: have your numbers, working capital and lender relationships in order now, so if the right block of ground comes available, you can move quickly and confidently on it.

If you’re interested in the ROI spreadsheet Barron’s team uses to analyze market trends, email cbarron@agviewsolutions.com .

Hear the complete discussion between Barron and Flory on Farm Journal TV . Also, you can listen to the Top Producer podcast discussion between Barron and Neiffer at the link below:

The Soybean Rally Many Counted On — And The Selloff Few Expected

Mon, 22 Dec 2025 15:42:32 GMT

Market Commentary for 12/19/26

Since reaching a 17-month high on November 18^th, soybeans have been in a sharp decline. Prices have fallen in 16 of the last 23 trading sessions and are now roughly $1.20 per bushel lower than a month ago.

The chart below shows the last 46 trading days.Interestingly, the first 23 days had only 7 down days, while the second 23 days had only 7 up days.

(Jon Scheve at Schevegrain.com)

Prices are still a little higher than 46 days ago when the rally started, but below values when the trade deal was announced in late October.

Will Soybean Prices Rally Again?
It could be difficult for US beans to sustain demand if South American beans are cheaper.Once Brazil’s harvest starts in late January, there will likely be an uphill battle for several months.

Exports
As this chart shows, export pace for US beans has been terrible.

(Jon Scheve at Schevegrain.com)

While attention has been focused on the potential for Chinese demand, broader global demand was largely overlooked by some traders. As prices moved above $11, US soybeans became uncompetitive in the global market. The recent pullback has brought US beans closer to competitor pricing, but further downside potential still remains as US beans are still higher than South American product.

Brazil’s January weather now becomes the focus.If precipitation is limited over Mato Grosso in early January or southern Brazil in late January, then bean prices could rally quickly.Currently, weather forecasts look for normal precipitation though.

Market Action – Soybean Futures Sale
After the announcement of a possible trade deal with China on October 27^th, futures were higher and trading $10.80. I set a target order to sell January beans at $11.20 futures.I picked this price because:

It was close to the average US farmer’s breakeven price
It was the highest value on the January contract since July 2024
I knew any value above $11 at the time was not competitive against South American suppliers
I expected irrational exuberance in soybeans and thought the market would trade up to at least $11.20 due to the trade deal.

On November 3^rd my order was hit, and I sold 100% of my crop using futures at that time, as this chart shows.

(Jon Scheve at Schevegrain.com)

Note, I only set the futures price.I haven’t set the basis or established when and where I will be delivering my cash soybeans.

Did You Regret Selling Everything When Prices Went Higher?
I didn’t regret it.In the days leading up to my sale, I was actually concerned I had set my goals too high.There were many reports that South American beans could be sold to China for what was equivalent to only $10.50 futures in the US.I thought I might have missed the best prices of the year and the chance to not lose any money on this crop this year.

Since I planted the soybean crop, there was never an opportunity to sell above the cost of production.With very little of my 2025 corn crop sold, and none of my 2026 corn or bean crop, it seemed very possible that I wouldn’t be able to sell any crop above the average farmer’s breakeven point this year.I wanted to reduce my risk on at least 1 of 4 crops I have to market in the next year.

I was also concerned that with rice, cotton, and wheat prices below breakeven values too, playing defense this next year may be the best strategy.

There was also a very small window where I could have beaten my price by anything significant.Of the 21 days values were higher than my sale point, only 8 closed higher than 10 cents above my sale.

Bottomline
I’m happy with my decision and price goal.And I still hope prices rally because I have some 2025 corn left to price and all of my 2026 beans and corn.

For questions—or to receive marketing content like this directly—connect with Jon at jon@schevegrain.com or schevegrain.com .

Want to read more by Jon Scheve?
Corn’s Invisible Supply Problem
Why U.S. Beans Can’t Compete Above $11—And What It Might Mean Next
Why This Year’s Corn Yield Might Be Higher Than Anyone Wants To Admit
A Drop In Soybean Yields Could Tighten Stocks And Support Prices Into Winter If The National Yield Is Too High, Is Demand Also Overestimated?

Corn’s Invisible Supply Problem

Mon, 15 Dec 2025 15:02:29 GMT

Market Commentary for 12/12/25

Corn has stayed locked in a tight $4.30–$4.50 range for 70 of the last 74 sessions, and this “holding pattern” seems likely to persist until the January USDA crop report.

(schevegrain.com)

In 30 of the last 36 trading sessions, March corn traded in an even tighter range, between $4.40 to $4.50.

(schevegrain.com)

Some estimates indicate only one third of the US corn crop has been marketed this year.This suggests any rallies will be met with farmer selling, while end users will likely buy the breaks in prices.

The USDA also increased the corn export pace in this month’s report.But, to sustain that pace, corn prices can’t rise too high, or US corn risks losing competitiveness in the global market.

Feed & Residual
There is an interesting dynamic within the USDA’s Feed & Residual category.Despite animals on feed remaining fairly consistent over the last 5 years, the category’s numbers have been erratic, as this chart shows:

(schevegrain.com)

The 2019-2020 marketing year saw an increase likely due to covid lockdowns and less ethanol and export usage.

Ethanol and export numbers are easier for the USDA to estimate because they are reported daily or weekly.Feed usage is harder to track, because the amount of corn going into on-farm feed rations is uncertain, and substitutions with other ingredients often go unreported.

Tracking crop carryover year to year is also challenging.The amount of unsold 2023 corn rolled into the 2024 marketing year is probably larger than many farmers want to admit.This isn’t surprising considering prices dropped in 2023 from $6.25 in June to $4.50 by that November. That put values that year well below breakeven and caused many farmers to wait for a rally that ultimately never came.

While the 2024 crop enjoyed a rally above breakeven levels in the middle of winter last year not every farmer took advantage of the opportunity.Many were still sitting on unpriced grain at the end of summer. As a result, less grain was marketed before harvest.It seems that much of that grain found homes in temporary grain bag storage and farmers are expecting a price rally this winter just like they saw last year.

This holding over of grain between marketing years probably makes it very difficult for the USDA to estimate the exact number of bushels held in on-farm storage.Even a 1% total production miscalculation in a marketing year can mean a 150-million-bushel adjustment to carryout.If those bushels remain in storage long-term and the situation repeats itself again the following year, the cumulative impact over 2 years could leave 300million bushels still in the system, but not fully reflected in the reported carryout number, which could definitely impact prices.

Since it’s difficult to determine exactly how much is being used for feed or carried over from year to year, it appears that the USDA adjusts the residual category.As a result, in big crop years it might appear that total usage is increasing, when it’s actually the carryout that is increasing. Then, when a crop is short and prices rally, those extra bushels that had been sitting in storage for over a year or two start to move into the market, and the crop that was expected to be small actually grows or the feed demand decreases.Over time, these residual bushels even out between crop years and the feed category number decreases at least 300 million bushels.

I think this means the real feed number is probably closer to 5.6 or 5.7 billion bushels. And it’s likely that the current Feed & Residual 6.1 billion bushels will haunt the market for the next year and act as an anchor to prices.

Since the start of 2025, corn prices were only above breakeven for 4 days in February.That means that farmers this year haven’t sold much of their corn.Many believe that disease pressure in other parts of the corn belt was worse than is being reported and look for the USDA to adjust yield lower in the January report just like they did last year sparking a rally in prices.

Bottomline
Unless there is a yield reduction in January, there is very little reason for carryout and/or the Feed & Residual numbers to drop.I expect corn prices to trade sideways until the summer weather markets.

Programing Note
I was interviewed on Markets Now on Agweb this week, discussing current market conditions and what direction farmers can expect prices to go in the coming months.

Click here to view: Markets Now with Michelle Rock and Jon Scheve of Scheve Grain

For questions—or to receive marketing content like this directly—connect with Jon at jon@schevegrain.com or schevegrain.com .

Want to read more by Jon Scheve?
Why U.S. Beans Can’t Compete Above $11—And What It Might Mean Next
Why This Year’s Corn Yield Might Be Higher Than Anyone Wants To Admit
A Drop In Soybean Yields Could Tighten Stocks And Support Prices Into Winter If The National Yield Is Too High, Is Demand Also Overestimated? Early Harvest Yields Are Inclusive. The Northern Corn Crop Seems Promising, But Concerns Remain In The

‘Farmers Can’t Outyield the Balance Sheet Anymore’

Fri, 12 Dec 2025 22:39:11 GMT

Randy Dowdy, high-yield corn and soybean farmer and agronomic consultant, paints a stark picture of the economic pressure bearing down on American farmers.

Fresh from a visit with customers, Dowdy says the same three questions dominate almost every discussion he had with growers:

Where can we cut costs?
Where do we have to spend money to stay in business?
How do we service existing debt when margins are razor thin?

Even with strong yields this year, many of the farmers, he notes, “could not outyield the balance books.” Commodity prices have not kept pace with rising costs, he says, leaving farmers struggling to keep their operations in the black.

Costs Have Soared, Partly Due To Regulations
Dowdy contrasts his early years in farming with today’s reality. When he started farming in 2008, his first tractor cost between $150,000 and $175,000. Now, he says, a similar horsepower tractor “can run roughly three times that dollar amount.”

He traces a significant part of that escalation to emissions and environmental regulations that began ramping up in the late 2000s. He recalls an initial price jump, followed by annual increases of 6% to 8% since then, compounding the burden on farm finances. The complexity that comes with the machinery systems, he argues, also has stripped farmers of their ability to repair their own equipment.

“You can’t work on [equipment] without a computer. Even the technicians can’t work on them without a computer,” he mentioned on a recent AgriTalk segment.

Noting not all of the price jump is due to emissions controls, Dowdy believes the regulatory wave gave some manufacturers cover to raise prices.

Tension Between Policy and Reality
Dowdy’s comments on AgriTalk came following a White House roundtable on Monday tied to a new $12 billion “bridge payment” plan . President Donald Trump said his administration will move quickly to ease environmental requirements affecting tractors and other farm machinery , arguing the changes will lower sticker prices and simplify repairs.

On Wednesday more news followed with Ag Secretary Brooke Rollins and Health Secretary Robert “F” Kennedy Jr., announcing a $700 million initiative for regenerative agriculture .

Dowdy said he’s not opposed to supporting agricultural niches — all of the profitable corn and soybean growers he and Total Acre business partner David Hula met with recently have some kind of specialty angle.

“If there’s a little help for those guys, I don’t have a problem with it. But at the end of the day, the row crop farmers are where the help needs to be,” he notes.

Part of the help has to do with machinery costs. He highlighted cotton pickers as one example.

“The cotton industry’s got one manufacturer that I’m aware of that makes a cotton picker. One. And it’s $1.2 million,” he says. “Where’s the competition that helps make that thing affordable?”

Dowdy doesn’t claim to have all the answers, but he would like a “seat at the table” to have a candid conversation with policymakers and regulators focused on one core goal: bringing equipment and input costs back within reach so farmers can keep their operations viable.

“I’m all for the farmer,” Dowdy says. “If the farmer wins, everybody wins.”

Dowdy and Hula address farmer profitability needs in more detail in their new Breaking Barriers With R&D podcast, available here:

You can also catch the AgriTalk discussion between Dowdy and Host Davis Michaelson below:

Why U.S. Beans Can’t Compete Above $11—And What It Might Mean Next

Mon, 24 Nov 2025 14:45:36 GMT

Market Commentary for 11/21/25

Last week, the USDA report showed the soybean carryout getting slightly smaller, between a yield reduction and increased crush demand.Some market participants are saying this may mean better bean prices down the road.

However, we may need to look deeper at export demand before getting too bullish on beans.As this Grain Stats chart shows, export movement has been painfully slow compared to last year and the 5-year average.

(Grain Stats)

The USDA is now estimating export demand at the lowest level in 12 years, and it’s uncertain if that is even attainable.

(schevegrain.com)

The market is hoping the late-October trade deal will bring another 12 million metric tons (MMT) of additional demand from China by the end of January.So far, though, China has purchased less than 3 MMT since then, and none in the last few days.

Plus, when soybeans are above $11 futures, they are more expensive as compared with Brazil’s beans through winter.That price spread only worsens in the spring as Brazil’s bean crop is harvested.US beans then need to be closer to $10.50 to compete in the global export market based upon current market fundamentals.

Some market participants think the Chinese state-owned companies will buy beans, regardless of the price, to honor the trade deal.While no one knows if that will happen, it is unlikely the rest of the world will buy US beans if Brazil’s beans are cheaper.That could mean any potential gains from additional Chinese purchases will be offset by fewer US bean purchases from other global buyers.

As January approaches, Brazil’s weather will be closely watched in the main growing areas during their reproduction stage.Current weather forecasts do not suggest any problems, but as we have seen over the years, weather there can turn very quickly.

Bottomline:
Fundamentally, it’s unclear what could sustain these soybean futures values.It appears the market will keep a risk premium in place for at least another few weeks, hoping for some additional Chinese purchases.And obviously, a big weather issue in South America could drive prices higher too.For now, I expect volatility to continue in the bean market.

For questions—or to receive marketing content like this directly—connect with Jon at jon@schevegrain.com or schevegrain.com .

Want to read more by Jon Scheve?
Why This Year’s Corn Yield Might Be Higher Than Anyone Wants To Admit
A Drop In Soybean Yields Could Tighten Stocks And Support Prices Into Winter If The National Yield Is Too High, Is Demand Also Overestimated? Early Harvest Yields Are Inclusive. The Northern Corn Crop Seems Promising, But Concerns Remain In The South The Market Hasn’t Given Farmers A Chance To Sell At Profitable Levels Corn

Why This Year’s Corn Yield Might Be Higher Than Anyone Wants To Admit

Mon, 17 Nov 2025 13:52:54 GMT

Market Commentary for 11/14/25

On Friday, the USDA released their November report.

The main takeaway is that the USDA expects a big crop with a 186 bushel per acre yield.However, the market remains skeptical and seems to be trading a yield around 182 - 183.The market is acting like it doesn’t want to be fooled like last year, when the USDA reported a massive 3.8-bushel yield drop in January.

Considering this year’s disease issues in the western corn belt, the market’s cautious approach makes sense.However, the surprise stocks increase in the September 30^th report suggests that last year’s final yield decrease in the January report was probably too much.And that could also mean the market’s belief of a big yield drop this January might not happen.

Feed & Residual
On Friday, the USDA made changes to the 2024 crop’s feed & residual estimate to account for the increase in stocks from the September 30^th report.They decreased the demand in this category by 183 million bushels, which is a 5% decrease in usage from 2023.However, the USDA left the upcoming year’s feed & residual projection 5% higher than 2 years ago and about 10% higher than last year, despite the animals on feed changing less than 1% in each year.

I think this indicates the USDA adjusted last year’s final yield using the residual number in the feed & residual category.With about 83 million corn acres harvested last year, that equates to a 2.2 bushel per acre yield increase, or a final yield closer to 181.5 last year instead of the 179.3 from the January report.I suspect if market participants believed last year’s yields were higher than previously reported, they would be more open to this year’s yield being higher too.

It’s probably not the feed demand that is changing in the reports.Most likely the USDA may be using the residual number as another form of carryout to “make the calculations work” when information isn’t easily accessible. Since it’s impossible to know exactly how many bushels go into feed across the country in any given year, this makes sense.The USDA has a very difficult job, and this year it may be even harder.

Will The Yield Be Significantly Lower Than 186 This Year?
Based upon the reports and yield checks I’ve done throughout the US, I don’t expect much of a drop in January’s final yield.Last year’s 3.8-bushel drop was huge and likely looking back incorrect.Realistically, the final stocks from the September report suggest it should have been only a 1.6-bushel yield drop last January.

If the market would now only expect a 1.6-bushel decrease in January’s report it wouldn’t necessarily be bullish to prices because the carryout is already over 2.15 billion bushels.A 1.6-bushel yield drop would only reduce carryout to 2 billion, a far cry from the 1.5 billion bushels carryout estimate last year that caused a nearly $1 per bushel rally.

Maybe the National Yield Potential Was Higher this Year
This year’s weather throughout the corn belt was mostly really good.Obviously, the disease pressure was concerning, but that may have prevented the crop from being 7 bushels per acre higher than the current 186 USDA estimate.

A national yield of 193 was not inconceivable before disease pressure became widespread.It would have only been 6% above trendline, which has been seen before.In 2009, the yield was 6.5% above trendline, and in 2004 it was 10% above trendline.Even as recent as 2014, 2016, and 2017 yields were at least 4.3% or more above trendline.At 4.3% above trendline this year, the yield would be 188.8, which the USDA is currently saying is not there.

I suggest every producer look at their historical farm averages, ideally in graph form.While the high and low years may be more extreme on any one farm versus the national crop, there is an upward trend in yields.I have yet to meet a farmer who says their yields have trended down over a 10-year time frame.Even fringe areas of the US are rivalling areas in the middle of the corn belt this year.I had a report of an 80-day corn variety harvested near the Canadian border that produced 210 bushels per acre which is nearly 60 bushels per acre above normal.

It’s important to remember, each farmer is improving their yields over time, so we should assume the national yield will continue to go up over time as well.

Something To Keep in Mind
US farmers never really had an opportunity to sell their 2025 corn crop at profit before harvest.So, this means a lot of corn is unsold.Now, with all the reports of widespread disease issues on social media, and remembering last year’s $1 market rally after harvest, it seems unlikely many will sell any time soon.Instead, I believe many will cling to the hope of a surprise repeat like last year.Could a big yield drop happen again?Absolutely, but there’s a good chance this year’s yield could be better than expected.

For questions—or to receive marketing content like this directly—connect with Jon at jon@schevegrain.com or schevegrain.com .

Want to read more by Jon Scheve?
A Drop In Soybean Yields Could Tighten Stocks And Support Prices Into Winter
If The National Yield Is Too High, Is Demand Also Overestimated?
Early Harvest Yields Are Inclusive. The Northern Corn Crop Seems Promising, But Concerns Remain In The South
The Market Hasn’t Given Farmers A Chance To Sell At Profitable Levels
Corn Struggles But Soybeans Look Like They Have Potential

Farm Equipment Auctions Soaring Despite Stagnant Economy: Unpacking What's Next

Thu, 09 Oct 2025 16:42:58 GMT

Casey Seymour and Greg “Machinery Pete” Peterson see a used equipment market that has flipped from last year, when dealers pushed out a glut of late model, used equipment to auction.

Today, the number of 1–to-3-year-old high-horsepower tractors (300 hp and up) on the market is down 60% from last year, and late model combine listings are down 54%, according to Pete. Yet surprisingly, auction activity is up 14% from last year, too.

So, retail sales and the farm equipment market are in a prolonged slump, but auctions are still booming. It’s an odd juxtaposition, and dealers have to figure out how to navigate the uncertainty in the middle of the busy auction season.

“If I’m a dealer, and 2024 was painful and we’re having these huge losses, but we keep talking about [having] this footing – that’s why you’re not having a huge sale – but maybe [you’re] streaming out five tractors on this auction or two on that one,” Pete says. “That’s what I’m seeing. Whereas last year it was just, the spigot was open, and dealer items were everywhere.”

Seymour expected more dealer liquidation auctions in Q4, but dealer reps tell him they are not planning a big push of equipment to auction this year.

“[We] have this stagnant marketplace, where it’s not getting any better, and it’s not getting any worse,” he says. “You’re just kind of stuck in the middle. But to still see the auction activity that we’re seeing and the prices we’re seeing, it feels like we’re at the bottom.”

Pete agrees with that take, pointing to a growing trend of multi-dealer auctions, like the Rich & Rich Red Power Auction this weekend in North Carolina, as another sign the market is down. He is also seeing an increase in farm retirement auctions as farmers try to avoid losing equity.

Pete wonders if the rumored farmer aid package from the Trump administration will spark a dead-cat bounce on used machinery values and farmer buying activity?

“I don’t see that making its way to the equipment side. They’re going to shore up [debts] first, build back up and then probably [buy] inputs, but I guess it depends on if it’s taxable or not,” Seymour says.

Pete and Seymour tried to stick to farm equipment trends and what’s happening in the auction world, but the guys could not ignore the giant elephant in the room. They share thoughts on the impact of social media on political tensions in rural America, and why they think politicians should come down to an in-person auction and have some real conversations with real Americans.

The Rest of The Episode

Commodities analyst Shawn Hackett joins Seymour to break down the impact of the U.S. government shutdown on crop prices, and used equipment specialist Aaron Fintel closes out the episode with a chat about how livestock payments are driving more buying activity on loader tractors out west in his neck of the woods.

Head over to YouTube to watch the full episode. Please be sure to hit the “Thumbs Up” button to “Like” the video and click on the “Subscribe” button to get a notification when a new episode drops.

Your Next Read: Machinery Pete’s 5 Pointers For Equipment Auctions

If The National Yield Is Too High, Is Demand Also Overestimated?

Mon, 22 Sep 2025 13:16:47 GMT

Market Commentary for 9/19/25

Last week I noted that the national corn yield estimates were still inconclusive based on early harvest reports. After another week of results, there’s still no clear indication of what the national yield will be. While supply remains uncertain, attention should probably also focus on the demand side. The USDA is projecting record corn production for 2025 but also record demand.

Ethanol Demand
According to USDA data, next year’s ethanol demand is estimated to match the highest production ever produced.

(USDA/Schevegrain.com)

Low-priced corn should keep ethanol production profitable.If overseas demand remains strong, then the USDA’s forecast is probably attainable.

Export Demand
US corn exports set a record last year, and the USDA is projecting another record this year.

(USDA/Schevegrain.com)

Lower prices are helpful in gaining market share.Add to that a decrease in world corn stocks, and another record year for exports seems possible.

My only concern with export potential is that the 3 largest corn producers (Brazil, China, and the US) are all expected to have record crops.Plus, Argentina and Ukraine will likely have nearly average sized crops.This means the 5 main countries that produce and/or export corn will have a lot of supply, which could make competition for US corn difficult if prices rally, and make current USDA estimates unachievable.

Feed Demand
The USDA is forecasting a 7.5% increase in feed demand over last year, or an additional 425 million bushels used in animal feed.

(USDA/Schevegrain.com)

This seems difficult to achieve, given that animals on feed are up only 1% from last year.Some market participants will say cheaper corn leads to more demand and other products will be displaced in the feed channels.

But that raises the question, where will these displaced feed alternatives go?They’ve lost value too and still compete in rations.Plus, if this reasoning is correct, then why didn’t feed demand increase last year from the previous year when prices were some of the lowest seen in several years?

Old Crop
I think it’s possible that last year’s national corn crop yield was underestimated.Corn basis values throughout the US have been very low leading up to harvest.For a crop that is supposed to have one of the tightest carryout in the last 10 years something doesn’t feel right about the cash markets for corn.

(USDA/Schevegrain.com)

There is a chance the quarterly stocks report on September 30^th could show more corn left in bins than the market believes.If that happens, carryout could increase for the 2025 crop marketing year.

However, I suspect the more likely outcome will be that if the USDA does need to make an old crop stocks change, they will “kick the can down the road” to the January report when they can adjust both stocks and the finalized 2025 corn yield and new crop demand all at once.

Sorghum
I am also skeptical of the USDA’s forecast of 225 million sorghum export bushels, which is 10 million below where it was 2 years ago and 130 million more than last year.With China being the main buyer of sorghum the last few years, it’s possible the export target for sorghum won’t get hit unless there is some kind of trade deal put in place.If the crop isn’t exported, it will displace corn in feed and ethanol rations to get rid of it.That could mean at least another 100 million corn demand bushels lost.

Bottomline
As I suggested last week, the market could be trading a yield under 183, versus the USDA”s September 12^th estimate of 186.7.If the yield drops to 180, it would mean a 650 million bushel drop in production.

But the USDA rarely cuts production without also reducing a significant portion of that value in demand somewhere in the equation.Feed demand had a sudden increase of 425 million bushels from last year, and sorghum may have another 100 million bushels that will need to find a feed home.That means carryout might only decrease from the current 2.1 billion to somewhere still above 1.9 billion bushels which is considerably higher this previous crop years 1.3 billion bushel carryout assuming no adjustments need to be made to old crop.

At 1.9 billion bushels of carryout, corn may not be able to sustain a rally without some kind of surprise.

For questions—or to receive marketing content like this directly—connect with Jon at jon@schevegrain.com or schevegrain.com .

Want to read more by Jon Scheve?
Early Harvest Yields Are Inclusive. The Northern Corn Crop Seems Promising, But Concerns Remain In The South
The Market Hasn’t Given Farmers A Chance To Sell At Profitable Levels
Corn Struggles But Soybeans Look Like They Have Potential
This Year’s Corn Crop Is Off To A Good Start, But Weather Will Dictate Price Direction
Capturing Spread Trade Profits Covers the Cost of Storing Grain

Early Harvest Yields Are Inclusive. The Northern Corn Crop Seems Promising, But Concerns Remain In The South

Mon, 15 Sep 2025 14:39:27 GMT

Market Commentary for 9/12/25

The USDA’s September Supply and Demand report made only minor adjustments. Planted corn acreage was raised slightly while yield estimates were trimmed. Higher export projections offset the additional bushels, leaving carryout nearly unchanged from last month.

The market responded by trading higher, likely because many traders think the yield estimate is still too high, given the widespread disease pressure and some late season dryness throughout the US.Yield estimates will remain relatively uncertain for another month until harvest results become more available, and the USDA provides updated numbers in next month’s report.

Early Yield Results
Early harvest results I’m seeing seem inconclusive.Some farmers along the Nebraska / Kansas line are reporting yields 5%-10% above normal.However, other farmers only a few miles away say yields are 5%-10% lower than average, especially when fungicide wasn’t applied.

Other farmers are telling me their yields, on fields that were treated for disease, will likely produce far less than they expected only a month ago.I suspect these kinds of reports are tripping up market participants.At first, this statement sounds like the yields will be really bad.However, I then asked these farmers what they thought their yield would be compared to normal years.Most farmers said up until a month ago growing conditions were great and they were expecting a record yield.However, now they suspect it may only be slightly above average.Very few farmers who treated for disease that I spoke with are expecting below average yields.

Reports along the Iowa / Minnesota state line from silage harvesters indicate very good yields, with some fields potentially 20% above normal.Reports from the Ohio silage crop indicate corn that was planted in April is producing well above average too.However, those same farmers indicated to me that the corn planted in late May may have reduced yields due to the dry late August weather.

National Yield Picture
Weather throughout the growing season in corn producing areas did not experience much dry weather until late August.Throughout July, only 9% of the corn belt experienced drought conditions.By the first week of August, that area had dropped to 3%.That is much lower than the 30% and 50% of the corn belt experiencing drought conditions during the same time period in 2021 and 2022.

July is the most crucial time for corn plant development, so timely rains during this time period are critical.Comparing 2025 to 2024, there was also a lot more rain in July and early August this year compared to last year.While the last half of August was drier this year than the same period a year ago, I don’t expect that will impact corn production nearly as much as it could hurt the soybean yield.

As the map below shows, about half of the US corn crop is grown north of I-80, and the weather there this year has been nearly ideal and could be a record in many places.

USDA

(USDA)

Yield concerns south of I-80 may come from areas with disease pressure but should likely be confined to the western corn belt.Also, the late season dry weather in the eastern corn belt could impact yields there too, but it might have happened late enough so yields may not be impacted much.

Bottomline:
Many farmers had ideal weather conditions until mid-August.Then in the last 30 days, the southern half of the corn belt began experiencing dry weather and disease.It’s now uncertain how much this will actually impact yields.

However, July weather impacts corn yields much more than August weather.Plus, many farmers may be pessimistic, thinking a month ago they were getting record yields and now they may only get slightly better than normal yields.Nevertheless, even average or just slightly better than average is still a good outcome.If the entire corn belt experiences this then final yield could come in higher than many believe.

For questions—or to receive marketing content like this directly—connect with Jon at jon@schevegrain.com or schevegrain.com .

Want to read more by Jon Scheve?
The Market Hasn’t Given Farmers A Chance To Sell At Profitable Levels
Corn Struggles But Soybeans Look Like They Have Potential
This Year’s Corn Crop Is Off To A Good Start, But Weather Will Dictate Price Direction
Capturing Spread Trade Profits Covers the Cost of Storing Grain
How the Delivery Process Works

Why Used, Late-Model Equipment Is Surprisingly Strong, and Get Ready for a Packed Fall Auction Season

Thu, 07 Aug 2025 15:08:43 GMT

Casey Seymour and Machinery Pete say late-model, low-hour equipment values are stabilizing and even trending up as we get close to kicking off the used equipment auction busy season.

Pete says a few recent auction transactions display the value “firmness” bubbling up on like-new machines:

(Machinery Pete Facebook)

At a dealer auction in North Dakota this week, a 2023 New Holland T8.410 tractor (521 hours) went for $237,000. That’s a record-high auction price, according to MachineryPete.com historical data.

(Machinery Pete Facebook)

At the same North Dakota auction, a 2023 New Holland L334 skid steer with only 227 hours sold for $49,000. That’s another record-high auction price.

At a Steffes Auction Group sale in West Fargo, N.D., a 2023 John Deere 9RX 640 tractor sold for $477,278. The average auction price for that machine sits at $488,250. Taking into account low commodity prices, Pete says that’s not a bad price given the uncertainty in the farm economy.

“There’s different ways to see things,” Pete says. “That average auction price has remained flat, but if you look back two years the average auction price was about $597,000. So last year was the humongous drop down to $488,250, and then so far this year its kind of holding.”

Besides tracking used equipment values, Pete likes to look at land values and what he calls “the toy factor,” which are sales of vintage, unique show tractors that farmers love to collect.

Meanwhile, Seymour is anticipating a fall auction season with “big activity” as usual, but he thinks it will look a little different once we get into the thick of it.

“You’re going to see the same level of consignment dealership sale activity, but it’s going to be heavily mixed in with farm and retirement auctions,” he says.

Seymour and Peterson agree auction companies must continue to step their marketing and social media games up. There will be so many auctions taking place this fall that grabbing buyer attention will be absolutely critical for auctioneers.

“I guess that’s what keeps us on our toes, things don’t stay the same, they keep changing, even in our business,” Pete adds. “I mean, yeah, bring it on. That’s always been my — I try to keep that mindset despite being the gray-haired, grumpy old guy on the front porch.”

The Rest of the Episode

Aaron Fintel, used equipment specialist with 21^st Century Equipment and founder of High Plains Wholesale, tells Seymour many farmers put off upgrading the combine for the last two years. Now it seems like everyone in his area is looking for a used combine.

“We’re getting to that point where guys haven’t done anything, and now they kind of have to,” Fintel says. “Combines are hot; combines $450K-plus are an absolute iceberg waiting for a big white boat to hit them. But $450K and under? You’re getting some action.”

He also is seeing more farmers buying based on model year over engine hours, which is a shift in buying behavior.

Shawn Hackett, president and CEO, Hackett Financial, gives an update on the price of corn, which is down in the sub-$4 range currently. He says we are in the middle of the third rainiest growing season over the past 50 years.

“You would think that we would get record yields and a record crop, and that’s what everyone is going with, but I wish it were that simple,” Hackett says. “It’s not that simple.”

And John Deere’s Bergen Nelson, go-to market manager – harvesting equipment, shared what he is seeing in the world of harvesting machinery and technology.

Head over to YouTube to watch the full episode. Hit the “Thumbs Up” button to “Like” the video and click on the “Subscribe” button to get a notification when a new episode drops.

Your Next Read: Used Equipment Values Have Stabilized in 2025, But the Surprising Trend Might Not Last

The Market Hasn't Given Farmers A Chance To Sell At Profitable Levels

Mon, 23 Jun 2025 14:33:20 GMT

Market Commentary for 6/20/25

December corn finished its third week of closing between $4.35 and $4.50.In the last 77 trading sessions, Dec corn only closed above $4.55 11 times, and never above $4.70.

No Opportunities
There have been virtually no opportunities to sell 2025 corn at a profitable value in the past year.After reviewing breakeven levels with many farmers throughout the US, it seems the average farmer in the US needs a $4.75 futures value with normal yields to turn a profit this season.As this chart shows, in the past year there were only 4 days where the price point was above the breakeven.

(Jon Scheve Marketing Against The Grain)

November beans managed to get a small boost from the biofuel mandate goals released last week, and traded within one cent of the highest value seen in 2025.Unfortunately, that price point is still at least 50 cents below the breakeven value for the average US farmer.Similar to corn, this chart shows that 2025 November beans haven’t had any profitable opportunities for over a year.

(Jon Scheve Marketing Against The Grain)

The market hasn’t given US farmers a chance to sell their 2025 grain at a profit.Even if farmers had sold grain before last June, it would have been very risky.One, 2025 fertilizer costs weren’t fully known back then, and those renting land in 2025 wouldn’t have known their rent values either.Plus, the 2024 and 2025 summer weather risk demanded a much bigger risk premium compared to the estimated breakeven levels that were being calculated for a crop 18 months away from being harvested.

What Can Farmers Do?
The biofuel mandate has given soybeans some upside potential.It may not happen right away, but by next year we may look back at this time as when the bean market turned around and maybe it will even pull corn out of the gutter.

Corn values can still be heavily impacted by weather.Right now, only 17% of corn is experiencing dry conditions.

(Jon Scheve Marketing Against The Grain)

This means funds see no reason to cover their short yet.However, if a high-pressure system would move over key growing areas in July, corn could rally significantly.If weather could be predicted, then prices could be predicted too.

Bottomline
The corn and bean markets have not provided US farmers with any opportunities to turn a profit this year.Luckily, the highest prices of the year occurred during the insurance averaging period.This could mean everyone is farming for insurance this year.Historically though, since the ethanol mandate 20 years ago, December corn has always managed to surpass the spring insurance prices eventually.Another stat to keep in mind is that February has not seen the high for the year since before 1990.Unfortunately, past performance is not indicative of future results.

Programing Note
I was on US Farm Report this weekend discussing the upcoming June acreage and stock report. Click here to watch: Are You Worried About Marketing Old Crop Corn? Here’s Some Advice

Want to read more by Jon Scheve?
Corn Struggles But Soybeans Look Like They Have Potential
This Year’s Corn Crop Is Off To A Good Start, But Weather Will Dictate Price Direction
Capturing Spread Trade Profits Covers the Cost of Storing Grain
How the Delivery Process Works
Why Isn’t The Corn Market Responding Positively To Tighter Balance Sheets?

Corn Struggles But Soybeans Look Like They Have Potential

Mon, 16 Jun 2025 12:39:44 GMT

Market Commentary for 6/13/25

The June USDA report is typically one of the least exciting reports of the year, and this year’s was no exception as it offered few new insights.The trade will now wait for the biggest report of the year on June 30^th when the stocks and planted acreage is released.

Corn can’t seem to catch a break.The USDA report wasn’t bearish, but the market took it that way.There are many variables in the market right now that I’m watching that could determine if corn is leaning more bullish or bearish.

Reasons to Be Bullish Corn

The US corn crop is not made in the month of June
Corn’s export pace is approaching a new record
Current carryout levels are in the “snug” range
Global ending stocks continue to be lowered
Corn prices are substantially below the breakeven point for farmers
Old crop basis values continue to increase in most areas
Brazil continues to expand their corn for ethanol use
China’s domestic corn values are higher than imported prices
US corn delivered to Asia is competitive with Brazil
Wheat is starting to price itself out of feed rations in the southwest

Reasons to Be Bearish Corn

The US corn crop is not lost in the month of June
Planting pace was normal on the whole throughout the US
Drought conditions are currently limited, and don’t appear to be growing
Brazil’s second corn crop continues to get bigger
The July / December futures inverse spread collapsed
Farmers still have an estimated 20% of old crop to market
There is too much sorghum left in the southwestern corn belt
No trade deals have been made
Corn struggles to rally on any positive news
Corn used for feed could be overstated by the USDA

This week, beans had a massive basis drop from one of the largest crushers in the US, and futures still didn’t drop much. This morning the Trump Administration released their proposed renewable fuels blending requirements, and they look very positive for soybeans moving forward.

These are variables I’m watching in beans.

Reasons to Be Bullish Beans

The proposed renewable fuels volume targets look positive for the next 2-3 seasons
June weather doesn’t impact bean production much
Planted acres are down year over year, and may go even lower in the June acreage report
China’s import forecasts remain at record levels
Beans struggle to trade lower on any negative news
Brazil’s currency is going up vs the dollar, which encourage exports from the US

Reasons to Be Bearish Beans

Brazil had a massive bean crop this year
The huge basis decline caused by one large crusher
World stocks are increasing
Carryout remains ample
Concern that Chinese demand is overstated
Farmers seem to still have quite a few beans left to market

Bottomline:
It is difficult to know which direction the corn market is headed, but beans look positive after the biofuel proposal was released.

Want to read more by Jon Scheve?
This Year’s Corn Crop Is Off To A Good Start, But Weather Will Dictate Price Direction
Capturing Spread Trade Profits Covers the Cost of Storing Grain
How the Delivery Process Works
Why Isn’t The Corn Market Responding Positively To Tighter Balance Sheets?
Will the National Corn Yield Be A New Record This Year?

This Year's Corn Crop Is Off To A Good Start, But Weather Will Dictate Price Direction

Mon, 09 Jun 2025 12:57:44 GMT

Market Commentary for 6/6/25

Over the last month, July corn has fallen from $4.70 to $4.40.Some of this drop may be attributed to funds going from a long of 350,000 contracts in February to being short 150,000 contracts this week as seen in this chart:

(Jon Scheve)

In 2023 and 2024, funds were also short around 100,000 contracts by early June.In 2024, funds continued to push the market down by going to a short 350,000 contract position in July.Conversely, in 2023 they went to a long 50,000 contract position by mid-summer and helped push prices higher.

Ultimately, weather will impact the direction funds take over the next 2 months.Historically, when the crop is 70% planted by May 15^th, which it was, there is a 75% chance the crop will make a trendline or above average national yield.

What about Late Planting in the Eastern Corn Belt?
There are concerns with the planting progress in Ohio, Kentucky, and Pennsylvania.At least 10%-15% of Ohio’s crop won’t get planted, which could be the equivalent of 350,000 to 500,000 prevent plant corn acres.Kentucky and Pennsylvania have made better progress but are still behind.Combined, these two states produce a little more than half the corn Ohio produces, so it seems likely that only around 200,000 corn acres could go prevent plant in these 2 states too.

There are some isolated areas in southern Indiana and Illinois that may also have some prevent plant acres, but it should be limited.On the flip side, producers in North and South Dakota managed to plant much quicker than normal this year, so there will likely be limited prevent plant there.This may mean any prevent plant acres in the eastern corn belt could be offset by fewer prevent plant acres than normal in the northwestern corn belt.

Wet weather in the eastern corn belt may keep planted corn acres from surpassing 97 million, but I doubt it will go lower than the 95.3 million acres estimated in the March planting intentions report.

Drought Monitor
As this map shows, almost 80% of the US corn crop is not experiencing overly dry conditions:

(Jon Scheve)

Every year usually around 25% of the US crop is facing questionable conditions at any given time.Going forward, the biggest factor impacting prices long term will be if the areas experiencing dry conditions expand, and if so, by how much.

Bottomline:
Basically, most of the 2025 crop is planted and is off to a good start.The funds have seen that and have been selling, which has been pushing prices down over the past month.Weather risk will increase over the next 10 weeks.As always, if anyone could predict the weather, they could predict the direction of grain prices.

Want to read more by Jon Scheve?
Capturing Spread Trade Profits Covers the Cost of Storing Grain
How the Delivery Process Works
Why Isn’t The Corn Market Responding Positively To Tighter Balance Sheets?
Will the National Corn Yield Be A New Record This Year?
Corn Has Potential But Economic Uncertainty Could Hold It Back

Capturing Spread Trade Profits Covers the Cost of Storing Grain

Mon, 12 May 2025 13:49:11 GMT

Market Commentary for 5/9/25

Understanding spreads in the futures market is important for farmers to hedge their positions effectively and can help to maximize a farm operation’s profitability.

What Is the Spread?
The spread is the price difference between two different contract months.For instance, on Friday May 9^th the price for each contract month was:

May futures - $4.42
July futures - $4.50
September futures - $4.29

When the nearby month is trading lower than the further out month, it is called a carry. The spread between May and July is an 8-cent carry, because the May at $4.42 is 8 cents less than the July at $4.50.A carry happens when the market needs someone to hold grain in storage until later months.The bigger the spread, the more incentive there is for someone to hold the grain longer.

Why Is This Important?
If done correctly, carry premium can be a low-risk way for farmers to capture additional profits for their farm operation.However, it only works when grain is already sold on the futures market, and typically it’s done before a cash value and delivery period has been established with a grain buyer.

For an example, if using the closing prices on May 9^th and my current position of having May futures sold at a theoretical $4.86 value; I could buy back the $4.86 sale for $4.42 today and then sell the same amount of July futures for $4.50 and collect 8 cents of premium.I now have “rolled” the contract forward to another month and collected the spread difference between futures account and taken my sale from $4.86 to theoretically $4.94.

While the new price point I have in my hedge account will look like its only $4.50, that doesn’t account for the profit of originally selling the May futures at $4.86 and then buying them back at $4.42 as part of the roll process.That is why good records must be kept to know the exact price point my corn is valued at to that point in time.

What If a Later Month’s Value Is Lower?
That would be an inverse market.Right now, July is trading at $4.50, which is a 21-cent inverse to the September at $4.29.This signifies the market wants corn sooner rather than later and is discouraging someone from holding their grain in storage after July.

Using the price examples and looking at my position from above, if I had rolled my May positions to the July already and now would roll them to the September, I would lose 21 cents after I buy back the July shorts sales in my account and then sell out the September futures at the same time. The market is clearly telling me to not do this with a price penalty. This means I should be looking to set basis and just lift out of my hedges against the July contract and be done marketing the 2024 crop sooner than later.

Why Not Buy Back the May or July Hedges and Wait for a Market Pop to Sell the Cash Grain?
Because that is pure speculation.Yes, that could turn a profit and seasonally there are times where the odds favor that to happen.However, that doubles my risk because I still do not have the new crop sold.That could place me in a position that if the market doesn’t go up, I lose money on both my old crop and the new crop.My goal is usually to reduce risk in my operation and capturing carry in the market achieves this in almost every marketing year.While not a home run play, it’s a base hit and continues to help drive me to profitable levels.

The Spread Trades as Its Own Market
The spread can increase or decrease at any time, and it can go from an inverse to a carry (or vice versa) based upon the market’s needs.Essentially, the spread adjusts to spur grain movement or slow it down.

For instance, when there is a lot of grain in the market being moved quickly, the carry can become larger to incentivize the grain movement to slow down.However, when grain isn’t moving, the carry can become smaller, or an inverse can happen, to entice bushels out of storage.Significant rationing in the market can often create very large inverses.

Basis values around the country work in tandem with spreads to help make the decision to store or move grain as well.Additionally, the delivery process on the Illinois and Mississippi River, like I explained last week, can also impact spread movement.

Market Action – Spread Trade
As I previously shared, I have been 100% sold on the 2024 corn crop since harvest.I then rolled my sales forward from the December to the March, then to the May, and last week I rolled them again to the July contract.

By doing this, I can use the carry premium to offset the interest costs that occur when holding grain in storage while waiting for basis values to improve between harvest and summer in my area.

How Much Carry Premium Has Been Available Since Harvest?
While deciding when to make the March / May roll trade, I analyzed how the December / March spread traded.As this chart shows, it narrowed in its final months.

(Jon Scheve)

Then the January USDA report showed a tighter carryout than previously estimated, so I was unsure how the March / May spread would react.Before the January report, I thought it could trade to 11, which was wider than any value since harvest.However, following the report from January 13^th to January 17^th the spread went from 10 cents carry to only 8.5 cents.

I became concerned it could narrow even more to 5 cents or less because of the drop in carryout that was discovered in the January crop report.So, when it returned to 10 cents, I took it.Unfortunately, the spread continued to widen and the carry increased another 6 cents.

(Jon Scheve)

In hindsight, I should have waited until the end of February to roll my March futures to May, because it went to 16 cents.However, that would have been hard to know at the time.Because the market was showing a tighter carryout after the January report, and after watching the December / March spread narrow considerably in its final month, I thought it was better to take the guaranteed 10 cents.Plus, I thought 13 cents was the highest the spread could likely go, so risking 3 cents of potential wasn’t worth it to me at the time.

May / July Corn Spread Review
Last week on April 29^th, the final trading day of the May contract before the delivery process began, I rolled the May contracts to the July and collected just over 9 cents.This was the highest value over the last few months, and a nice jump from several days before.

(Jon Scheve)

While I missed out on 6 cents on the March / May contract roll, I did about as well as possible on the May / July roll.

I have managed to collect the following carry since harvest:

December / March Roll – 10 cents
March / May Roll – 10 cents
May / July Roll – 9 cents
Total collected – 29 cents

If I could have timed each trade perfectly, I would have made the following:

December / March Roll – 19 cents
March / May Roll – 16 cents
May / July Roll – 10 cents
Total collected – 45 cents

Over the last 15 years, I have collected an average of 25 cents of carry every year from harvest to summer.I’m satisfied that I at least beat my long-term average this year.

Does The 29-Cent Spread Carry Premium Cover the Cost to Hold Grain in the Bin?
With the average cash value of corn from harvest until now under $4.50 in my area and using an 8% interest rate on my operating note, it costs me 3 cents per month per bushel to hold my grain in the bin. This means the 29 cents I accumulated will pay the interest cost on my grain from the end of harvest until the 3^rd week of July, as I wait for basis values to improve.

Bottomline:
I’m now 100% sold on my 2024 corn production at basically $4.95 against July futures.This means I’m sitting in the top 25% of the market’s range on the July ’25 corn contract since January 2024.

(Jon Scheve)

Want to read more by Jon Scheve?
How the Delivery Process Works
Why Isn’t The Corn Market Responding Positively To Tighter Balance Sheets?
Will the National Corn Yield Be A New Record This Year?
Corn Has Potential But Economic Uncertainty Could Hold It Back
Has Corn Hit Its High For The Year?

How the Delivery Process Works

Mon, 05 May 2025 12:03:29 GMT

How The Delivery Process Works
I have received requests for an explanation of the corn futures delivery process. So, I reached out to my good friend Joe Rich of O’Bryan Commodities to help me summarize this complex process.

The delivery process is a big driver of the spreads between futures month contracts. It also determines how much carry is needed in the market or if supply is limited and warrants an inverse to pull the grain out of storage. The delivery process can also help trigger cancellations of sales contracts potentially in tight market years. Large carries or inverses can also provide indications of futures price direction as well.

History
The current delivery process was set up many decades ago when corn exports were nearly 30% of total demand. The total US exported bushels stayed relatively consistent for 40 years but have increased about 50% in volume over the last 10 years. Despite these recent increases, exports today only account for around 15% of total corn usage in the US. The feed and ethanol sectors each usually consume more than twice as much as what is exported.

Export Delivery Facility Locations
There are about 40 export delivery facilities registered with the CME group (i.e., the owners of the board of trade). These facilities are located from Chicago and follow the Illinois river through Peoria and down to St. Louis. All these locations can load grain on barges that can eventually be sent to New Orleans.

Originally the Illinois river system was the most logical area for the delivery facilities to be because of their proximity to the Chicago Board of Trade and the high concentration of corn and bean acres nearby.

About 10 different large grain companies own all these facilities. Some companies have just 1 delivery facility and 2 companies have more than 10 registered delivery points. Facility sizes range from minimal storage to 12+ million bushels of space.

How Is Delivery Taken?
Loading barges that hold 55,000 bushels are the “defacto” trading mechanism of the export delivery process. So, if someone wants to take physical delivery on the board of trade, it generally requires taking a large quantity all at once. Some facilities can accommodate buyers by loading rail cars.

What Is the Delivery System Used For?
The current delivery system allows the price of grain on the CME to represent the actual price of the physical grain at a defined location at a certain point in time. For example, deliverable stocks of corn near Chicago are valued with a near zero-basis level. However, the further away from Chicago the grain is located the more basis values vary. For instance, corn may be +40 cents to the CME in Ohio, but -40 cents to the CME in North Dakota.

However, since grain is exported out of New Orleans, barge freight costs vary all along the river. The locations that are closer to New Orleans will have rates that are less than those that are further away. This required that the CME had to develop a rate structure that was fair for all the delivery facilities along the Illinois river from the points between Chicago and St. Louis to New Orleans. Therefore, the CME set rates on how much premium elevators in Peoria or St. Louis can charge to loadout grain for the delivery process. Premiums are higher for locations further downstream from Chicago on the river with the St Louis area having the highest rates.

How Does the Delivery Process Start?
It starts by a futures contract turning into a “delivery receipt.” This occurs during the approximant 10-trading days period that usually starts a day before the 1^st day of the contract month. So, for May corn the delivery period would run approximately April 30^th through May 14^th.

The delivery elevator can elect to “put grain out for delivery” in the form of a registered receipt with the CME. The decision process first starts with the delivery elevator comparing the value of their grain as either loaded out at the set premium value over the CME price for their location verses their local basis market prices. If the best sale is to deliver, the delivery elevator will tell the CME of their intentions and it will be registered as a deliverable stock ticket, which will show which facility location the grain will be located at.

The receipt will be assigned to the oldest long position futures contract on the CME. This is why the average trader is told to be out of their long positions before the delivery process begins. Once a delivery receipt is applied to a futures contract holder that entity can do one of three things with the receipt:

1. The new receipt owner could have the grain loaded out on barge or rail If cash basis justifies delivery as cheapest load out.
2. The new receipt owner could redeliver the receipt back into the market if it is still within the delivery process time window.
3. The new receipt owner could elect to pay the CME storage fees until a later date to redeliver receipt or load out physical grain. This is done by the CME collecting the fees and passing them on the commercial facility that delivered them for as long as the futures are registered.

Why Would Someone Take Physical Delivery?
You would only want to load out grain and take physical delivery if you couldn’t source grain any other way. Generally, taking actual delivery is a last resort for sourcing grain because the delivery system is slow and inefficient. It takes time to get barges into place to the load at the delivery elevator and the holder of the receipts must pay storage until the grain is loaded out. On top of that once the grain is loaded in barges the choices for where to take that grain becomes extremely limited as there are a lot less choices for who can take a barge and be able to unload it around the country.

Ultimately though it comes down to freight costs and spreads. There are daily bids for cash corn on barges in New Orleans, LA often abbreviated to NOLA. These bids for a barge of corn are delivered to NOLA with the Costs of Insurance and Freight (CIF) from all points on the river systems in the US. “CIF NOLA” barge bids are the most-commonly traded single cash market in the US.

CIF NOLA bids are based on supply and demand from barge freight rates on the entire river system, so changes in barge demand can impact freight rates and basis bids in NOLA. All barge loading facilities and every delivery facility are very familiar with daily freight rates and bid accordingly off the CIF NOLA bids. These barge bids compete against ethanol plants and rail loaders looking for grain throughout the Midwest and influences basis values around the country.

On the flip side, basis value adjustments at ethanol plants and feed mills can impact basis demand on the CIF NOLA bids. For instance, if there was limited corn supply somewhere, basis values will adjust to incentivize corn be moved to the areas of higher demand and would likely eventually work their way back to impact delivery elevators in Illinois. If demand for grain is severe enough, basis values may encourage someone to just buy the grain on the CME, load it on a barge, and send it to NOLA.

That’s why market participants are always monitoring barge freight costs, location load-out spreads, interest rates, basis bids delivered to Illinois facilities and basis bids for CIF NOLA barges.

What Usually Happens
Once receipts are delivered upon, the spreads between the futures contracts or basis bids for barges will quickly adjust. This will encourage the receipt holder to likely do option #2 above and redeliver. Often the original elevator hopes to end up reowning their own receipts and cancel the contract delivery all together as this is the most profitable scenario for them. However, if the original delivery facility owner doesn’t get their own receipts back and the holder of the receipt doesn’t want to take delivery then option #3 could become an option. This scenario can often provide opportunities for people with large sums of cash to generate some guaranteed short-term income.

Why Would They Do This?
It usually boils down to the cost of money (i.e., interest) and is mostly done by hedge fund managers or large grain companies attempting a quick low risk return on investment.

For example, most traders use margin to buy and sell contracts on the board of trade (current minimum margin on a contract is around $2500). If someone with a long futures contract allows that contract position to be delivered upon, they must come up with the full value of the contract. If that price was $5/bushel that would mean the long futures holder have to come up with $25,000 that day.

Hedge funds trying to turn a profit will compare storage costs that are predetermined by the CME for delivery facilities and the cost of their money (i.e., internal company interest rates) against the futures market carry (i.e., price difference between 2 months). Usually during a big crop year, the carry will be larger than the storage rates and the interest that companies feel the money in their bank account is worth. This kind of scenario could provide a hedge fund with a market position that has better returns than US Treasury Bills. Plus, since the Board of Trade has never had a default on receipts to date, it can be considered a safe investment on par with the US Treasury for some large financial institutions.

Can the Delivery System Be Rigged?
The CME vigorously monitors the delivery process to prevent manipulation for personal or company gain. Therefore, market participants taking or loading out delivery must be able to justify their reasons to the CME to ensure the market is working appropriately.

Bottom Line
The delivery process is extremely complex with many moving parts. Very few participants can take or load out physical delivery. Occasionally, if the market conditions are right, hedge fund managers will participate in the delivery process if there is sufficient return on investment opportunities. And ultimately, the delivery market helps adjust futures values and the price market participants can receive to ensure that supply and demand meet as efficiently as possible.

It’s not a perfect system and there are many who wished it worked differently, but it’s what we have today.

Want to read more by Jon Scheve?
Why Isn’t The Corn Market Responding Positively To Tighter Balance Sheets?
Will the National Corn Yield Be A New Record This Year?
Corn Has Potential But Economic Uncertainty Could Hold It Back
Has Corn Hit Its High For The Year?
There Are A Lot More Questions Than Answers For Corn Prices

Why Isn't The Corn Market Responding Positively To Tighter Balance Sheets?

Mon, 28 Apr 2025 13:07:03 GMT

Market Commentary for 4/25/25

The corn market doesn’t seem concerned with the possibility of tighter stocks, which may mean there is more supply than the USDA is currently estimating.

One indication of this is that both wheat and sorghum’s basis values in the southwestern corn belt are much lower than normal for this time of year.This is pulling down corn’s basis value there too, which is unusual.Typically, the southwestern corn belt pulls corn to it this time of year, it rarely pushes it away like we are seeing now.

The ample wheat stocks from last harvest are likely causing some of this. Plus, current weather conditions are average to slightly above normal for the next wheat crop compared to the last 5 seasons.This suggests wheat stocks will likely stay the same or increase a little in the next marketing year.This could put downward pressure on prices, and keep wheat in the feed ration longer at the expense of corn.

Sorghum is being severely impacted by the trade war with China.In the last few years, China has purchased most of the US sorghum crop at a higher value than corn.However, the trade war has halted these purchases.If China doesn’t buy US sorghum, it can only be used for feed.And due to its efficiency in feed diets, it will need to trade at a discount to corn.Currently, there is way too much sorghum left from last year, and it looks likely there will be significantly more acres planted this year.Therefore, sorghum’s issues may eventually become corn’s problem.

This would seem to indicate the corn used for feed estimate is too high.However, I’m starting to doubt the USDA will change their feed estimate until after the June stocks report, or they may even wait until after the September report.That could keep corn prices from dropping substantially in the short term.Plus, there is still weather risk going into the growing season, so prices may remain range bound for the next few months.

Speaking of range-bound prices, corn finished the week within the same 15-cent trading range it’s been in for the past 2 weeks, and it finished almost exactly in the middle of the range it’s been trading since mid-December.It’s difficult to see a reason why it will leave this range anytime soon.

Want to read more by Jon Scheve?
Will the National Corn Yield Be A New Record This Year?
Corn Has Potential But Economic Uncertainty Could Hold It Back
Has Corn Hit Its High For The Year?
There Are A Lot More Questions Than Answers For Corn Prices
Will A Drop In Sorghum Exports Hurt Corn Values?

Will the National Corn Yield Be A New Record This Year?

Mon, 21 Apr 2025 13:38:11 GMT

National yields are always highly debated within the trade from when they are first published in the May USDA WASDE report until they are nearly finalized in the January report. It makes sense because yields are the biggest driver of supply and the quickest way for prices to rally.

Each year, USDA publishes a trend line yield that seems too high for some market participants. Often, it’s because the yield estimate requires a new record or a tying of a previous record yield.

I expect USDA will start the year in May with a national yield of 181 bu. per acre. For one, it would be near the 50-year straight-trendline yield. Two, it’s the estimate the USDA Economic Forum showed in their February report, and USDA has used the forum’s yield estimate as their starting point for the past few years.

How Often Do New Records Happen?
More often than one may think:

Last 50 years – 20 times – or 40% of the time
Last 40 years – 14 times – or 35% of the time
Last 30 years – 9 times – or 30% of the time
Last 20 years – 7 times – or 35% of the time

Basically, this suggests that in one out three years there will be a new record yield. The following chart illustrates this.

(Jon Scheve)

Almost every year there are people who say the national yield will fall substantially below trend for some reason, usually for a weather issue. However, the chart above shows that in the last 50 years the national yield only fell 4 bushels below the trendline 10 times, or 20% of the time. This suggests there is a better chance the national yield will hit a new record every year, instead of having a big loss.

And the most common outcome, 37 out of the last 50 years (or 74% of the time), the final yield was above or within only 2 bu. below the 50-year straight-trendline yield. That indicates there is a good chance the national yield will be over 179 this year.

But Is the Yield Trend Growth Slowing?
Many crop watchers’ debate this issue; however, based on the chart above yield trend growth doesn’t seem to be slowing. In 2020, after five of the previous six years had above trend yields, very few market participants would have thought this.

In the chart below, if we look at the straight-trendline yield of only the last 10 years, the yield was over trend line six times.

(Jon Scheve)

Only in 2019, when the crop was planted very late, did the yield fall more than 4 bushels below the 10-year straight-line average. This chart suggests there is a 90% chance the yield will be over 175, if the crop is planted on time, and there is a 60% chance the yield will be over 179.

Daily Average Temperature
My colleagues at CropProphet have analyzed the impact of the daily average temperature during pollination on final yields for many years. Their findings in the chart below indicate the weather during pollination over the last 10 years has actually been very stable compared to the previous 35 years.

(Jon Scheve)

This narrow range of average to cooler temperatures during pollination has likely helped keep yields relatively consistent. And cooler temperatures during pollination give crops a better chance at higher yields.

What Will the Final National Yield Be This Year?
Trendline yield data from the last 50 years says there is a nearly 75% chance of a 179 yield or higher.The odds may be even better if weather patterns from the last 10 years remain consistent.

On the downside, and based solely on historical data, there is still a 20% chance the yield will fall below 177.

Bottomline
While the weather is unpredictable, human nature is not. I expect a lot of fearmongering in the market this summer with plenty of negative weather headlines that will drive prices higher at some point. While a widespread national drought that leads to a price rally is always possible, the odds are lower than most people realize. Producers should look at any rally due to a weather scare as an opportunity to sell or at least protect their downside.

Want to read more by Jon Scheve?
Corn Has Potential But Economic Uncertainty Could Hold It Back
Has Corn Hit Its High For The Year?
There Are A Lot More Questions Than Answers For Corn Prices
Will A Drop In Sorghum Exports Hurt Corn Values?
Are The Highs For Corn Already In For The Year?

Can Farmers Weather The Trade Uncertainty Storm From China?

Tue, 15 Apr 2025 19:44:40 GMT

China is vitally important to the U.S. as an ag trading partner: 50% of the soybeans the U.S. sends abroad are destined for Chinese ports. You can’t snap your fingers and replace that demand, even if every single one of the 130+ currently-in-negotiation trade deals are resolved to favorable terms for the U.S.

“And I keep pointing out to people that it is soybeans, but also other crops as well,” says Joe Glauber, former USDA chief economist and a current emeritus fellow with the International Food Policy Research Institute. He says 80% of U.S. grown sorghum is also exported to China.

Related: China Increases Tariffs to 125%: What Ag Exports Will Be Most Impacted

The last time these two world power ag markets were besieged with trade uncertainty, during the first Trump administration, soybean exports to China dropped 75% from the previous year, Glauber says. He also thinks it’s too early to get a long-term read on how the market will react to the Trade Wars, because tariff policy seems to shift as often as an eastern Iowa headwind.

And unfortunately, if you’re looking for a silver lining in the renewable fuels arena, Glauber also thinks it’s too early to know how that market will be impacted. There have been increases to domestic biofuels processing capacity over the last five years, but its hard to get a read on how EPA will approach the market.

“I don’t have a sense yet of how this EPA will operate,” he adds. “There’s always been tensions in those agencies between oil on the one hand and renewables on the other. Obviously, those would be good alternative markets for our soybeans if you can’t export, and going into invested crush would be a nice alternative, but we’ll see.”

Cotton is another domestic crop that is in a world of hurt, Glauber says. Acres are “really seeing a decline” and that’s not a one off this year either, it’s become a long standing trend at this point.

With soybeans, cotton, and even corn prices in a bad spot, one would presume there will be a wave of farm foreclosures hitting rural America this year. Thankfully, though, direct payments have helped stave off that potential nightmare, for now. But nevertheless, the threat is real and it looms large.

“Remember, we are getting a ton of money put into the sector this year from the bill that was passed by Congress in December,” Glauber says. “So that’s $31 billion coming in with $10 billion of that going out to farmers as direct income support to offset low margins. So, I don’t think we’ll see a lot of farms going out of business. But certainly, if these short, tight margins persist for a long time, then that’s going to affect people.”

Glauber is optimistic though that it won’t take a seismic “Big Bang” level event to punch up some upside into crop prices. He thinks some drought, or even “a little dryness showing up in the part of the world” would make the markets react positively.

“That tells me that stocks are still…it’s not burdensome that they’re really depressing prices,” he says. “But that said, I mean, these are low prices and relative to where we’ve been, margins are still tight.”

One area of American ag that is thriving right now is the protein side, with hog, beef, and poultry markets all “a bit of a different situation (going on) there,” Glauber adds.

You can listen to the full AgriTalk episode here.

Your Next Read: Follow These 3 Rules To Manage Commodity Market Uncertainty

Corn Has Potential But Economic Uncertainty Could Hold It Back

Tue, 15 Apr 2025 16:04:57 GMT

Market Commentary for 4/11/25

The USDA released their updated supply and demand estimates after the stocks report nearly 2 weeks ago.Carryout was tighter than many in the trade were expecting.I was anticipating a bigger decrease in corn used for animal feed to offset any export increase.With what we know today, most in the trade seem to find the increased exports number reasonable.

I thought the decreased carryout should have caused corn to rally at least 10 cents immediately after the report was released; however, it only went up a few cents.And while it did close on Friday another 7 cents higher, I expected it to have been a lot more.Friday’s rally was probably due to the US dollar dropping, which makes US exports more affordable globally.

I was also surprised the May to July spread didn’t tighten up and instead widened more than before the report.If supply is as tight as the USDA suggests, then the spread should have narrowed as end users look to shore up more supply.This could be indicating the rally is running out of steam.

Reasons to Believe the Corn Rally Will Continue
One positive for corn is that it has finished 9 of the last 11 trading sessions stronger, which this chart shows:

Jon Scheve

(Marketing Against The Grain)

However, two months ago corn had a run where 9 out of 10 trading sessions were lower.Unfortunately, corn hasn’t rebounded back to the high posted on February 20^th.

Why Not?
Looking back all the way to July of last summer, funds were short just over 350,000 contracts due to the excess grain from the previous year that was still in storage and the widespread good weather during pollination.At that time, corn traded down below $4.00.

As dry weather increased from late July through harvest, funds started buying and by February 20^th they were long 350,000 contracts, a 700,000 contract turn around.Now two months later, they have sold most of their positions and are only long about 50,000 contracts.

What Spooked the Funds?
It seems that many of the funds are concerned about the tariffs, threats of a trade war, and increased fees on ships going to ports in the US that are registered or built in China.While politics can be spun from both sides, usually big money focuses more on how to make the most money they can after factoring all potential outcomes and returns instead of listening to political rhetoric from either side.

Historically, tariffs have been a direct tax on the citizens of the country who set them.And for the last 90 years, the US has mostly tried to remove them because they are a barrier to trade and artificially raise prices on our citizens.This recent policy change is a complete reversal of decades of trade policy, plus the implementation and duration of the strategy hasn’t been very clear.The funds and the markets in general don’t like change and uncertainty, which is making trading a challenge for them.

Right now, there is a lot of fear in the market that this sudden 10% tax on all goods coming into the US and the 100%+ tax on Chinese goods will increase inflation and the potential for a global economic downturn.If this happens, business profits could take a hit, which could mean workers potentially getting laid off and having less disposable money.And less disposable income usually means less spending on everything including food, which would impact the livestock market and grain purchases.

While the goal of the tariffs seems to be to bring back US jobs, logistically it will take years to build up factories and hire people to work in them.The funds are likely looking at shorter term potential outcomes within 6 months to a year.

Will Funds Jump Back into Grain?
I don’t expect funds to short corn in the next few months, and if they do, I doubt it will be much.Going short right before the growing season would be an unusual time.Plus, with so much uncertainty in the market right now, it’s understandable why many probably won’t want to take on more risk in either direction.

However, if there was a widespread weather event that significantly impacted supply, they may jump back in quickly.Weather uncertainty impacting the market is probably a month away, or maybe even longer if Brazil has normal weather in early May.

War Is Hard to Predict
The market had a difficult time figuring out the impact of the Russian invasion into Ukraine on the market.Similarly, the economic war being fought between China and US will be a challenge for the market to overcome right away.There are a lot of theories how this will play out, but history has taught us that war is unpredictable and strange things can happen.I expect there will be more surprises to come.

Bottomline
The USDA report this week was positive for corn.It would be great if corn retested the highs of nearly $5.20 from almost 2 months ago.However, there are a lot of economic unknowns to assume that corn must rally.

Want to read more by Jon Scheve?
Has Corn Hit Its High For The Year?
There Are A Lot More Questions Than Answers For Corn Prices
Will A Drop In Sorghum Exports Hurt Corn Values?
Are The Highs For Corn Already In For The Year?
Will Corn Rally Again?
Can Corn Go Even Higher?

Follow These 3 Rules To Manage Commodity Market Uncertainty

Mon, 14 Apr 2025 17:28:04 GMT

Tariff action and trade tiffs have dominated the Trump administration’s first three months, creating one of the greatest periods of market uncertainty many of us have ever had to manage. It’s true what they say: Markets don’t like uncertainty.

For markets, certainty equals confidence. If participants are confident in the market’s trend, professional trading funds, for example, pile onto one side of the market with high certainty it’s the right decision.

When there’s uncertainty, or low confidence, traders and fund managers are less committed to positions. They are into a new position at the start of a session and out before the closing bell.

In times of uncertainty, it’s best to go back to the basics of risk management. Effective risk management has little room for mistakes, but that doesn’t mean it has to be perfect. It just means you follow the basic rules in selecting the right marketing tool to use at the right time.

Rule #1: Basis Matters

When basis is above the three-year-average, use marketing strategies that capture that basis strength with a cash sale for immediate or forward delivery. That includes a basis contract that sets basis but leaves price open.
When basis is below the three-year average, use marketing strategies that leave basis open. Those options range from doing nothing to a short position in futures as a hedge against downside price risk.

Rule #2: Price Matters

If you anticipate higher futures prices ahead, use strategies that leave price open.
If you anticipate lower futures prices ahead, use strategies that capture price.

Rule #3: Now Put Basis and Price Together

When basis is strong and you’re bearish on prices, capture basis and price. That’s a cash sale for immediate delivery. If you don’t have the bushels to move that’s a forward-cash contract for future delivery.
When basis is strong and you’re bullish on prices, capture basis and leave price open. A basis contract can work great in a scenario like this — so does a minimum price contract with cash sale covered by a long call option. Remember, the premium on a call option generally appreciates as futures prices rise.
When basis is weak and you’re bearish on prices, capture price but leave basis open. A short futures position against your grain in the bin or in the field captures price. When basis returns to normal or strong levels, make the cash sale and exit the short futures to capture basis. A put option will provide similar protection. The premium on a put option generally appreciates as futures prices fall.
When basis is weak and you’re bullish on prices, choose a strategy that leaves basis and price open. Simply put: do nothing, but make sure the decision to do nothing is reasonable.

Click here to stay up-to-date with commodity markets, prices and futures.

Has Corn Hit Its High For The Year?

Thu, 27 Mar 2025 15:46:42 GMT

Market Commentary for 3/27/25

December corn closed the week at about the same level as the previous few weeks.This has left new crop corn down about 30 cents from the calendar year’s high in February.Some farmers have been asking, “are the highs for the year already in?”

History Says the Highs for the Year Probably Haven’t Happened
While it’s impossible to know for certain, the following provides some historical insight.The chart below shows which calendar month, in the year the crop was grown, that the December contract hit its high for the last 35 years.

Marketing Against The Grain

(Jon Scheve)

So far in 2025, December corn’s high was on February 20^th when it hit a tick below $4.80.Since 1990, December corn has never hit its high in February.90% of the time, it has happened after February, with 50% of the highs happening in May, June, or July.

In just the last 10 years alone, corn hit its high for the year 8 times in late spring or early summer. In the other two years, one was in January and the other in November.

Spring Insurance Price History
This year the spring insurance corn price is $4.70. Each year since 2001, December corn has eventually traded above the spring insurance price at some point.

In the last 24 years, December corn hit its high in January 3 times (2001, 2013, and 2024).In each of those years, December corn still managed to trade above the spring insurance average value at some point in the year.In 2001, it beat the insurance level by 1 cent in July.In 2013, it beat the insurance average by 8 cents in June.And in 2024, it beat the insurance level by 30 cents in May.

Bottomline:
While it is possible the high for the year was hit a month ago, history suggests it may be too early to be concerned about new crop corn values.There is still a good chance December corn prices could exceed $4.80 or even $5.00 in the next 6 months.

Want to read more by Jon Scheve?
There Are A Lot More Questions Than Answers For Corn Prices
Will A Drop In Sorghum Exports Hurt Corn Values?
Are The Highs For Corn Already In For The Year?
Will Corn Rally Again?
Can Corn Go Even Higher?

There Are A Lot More Questions Than Answers For Corn Prices

Mon, 24 Mar 2025 14:15:35 GMT

Market Commentary for 3/21/25

Currently, there are a lot of upcoming variables that could have a big impact on the market.

Chinese Built Ships and Port Fees
Perhaps the biggest concern facing grain trading participants is the potential $1 million fee on any Chinese built ships docking at an American port.While this could threaten US imports, it is also scaring many bulk commodity exporters.

Several trade groups, from coal to corn, will be in Washington D.C. next week to express concern that this could stifle American exports.The coal industry is already having issues lining up vessels after May.If this fee is enacted, it could make US grains less competitive globally.

Right now, US corn is the most competitively priced in the world, which is keeping a floor under prices.However, any change in shipping costs could push US grain prices lower and affect the global grain supply and feed demand.

USDA Report on March 31^st
The following week, the stocks and acres report will be published on March 31^st.This report will either show that stocks are higher than currently estimated and feed demand isn’t as strong as traders think, which could send prices lower.Or it will show that stocks are getting tighter, which could help push prices higher.

While the stocks estimate has more impact on old crop values, the planted acres number affects new crop values.Realistically, the question isn’t “if” US farmers will plant more corn in 2025, it’s “how much more” will they plant.Right now, the trade is anticipating around 94 million acres.

April 2^nd Tariffs
Then the market will watch how the new tariffs will be enacted. From there the market will watch to see how other countries hit back at the US, or whether they will continue to buy US commodities.

There is concern that tariffs could incite global economic constriction.This could lead to less demand for ag commodities moving forward.

US Planting Weather
As always, weather is the great unknown.The delayed planting pace of 2019 is still in the back of everyone’s mind.A fast-planting pace increases the chances of more corn getting planted.However, a slow-planting pace likely decreases the chances of increased corn acres which could lead to higher prices.

Brazilian Weather
Brazil’s second corn crop has grown significantly over the last 12 years.Most of that second crop is exported, and it now rivals the size of what the US exports.

Brazil’s second corn crop, which was planted in February, will go through pollination in May. The weather at that point will be critical for yield potential and how much will ultimately be exported to compete against US corn.

Bottomline
There is a lot of uncertainty in the market right now.If stock estimates are tightened, and tariffs are delayed or removed, and the tax on Chinese built ships doesn’t happen, then corn prices have a lot of upside potential.

Want to read more by Jon Scheve?
Will A Drop In Sorghum Exports Hurt Corn Values?
Are The Highs For Corn Already In For The Year?
Will Corn Rally Again?
Can Corn Go Even Higher?

Will A Drop In Sorghum Exports Hurt Corn Values?

Mon, 17 Mar 2025 12:39:32 GMT

Market Commentary for 3/14/24

Some market participants were disappointed to see no changes to corn demand in the March supply and demand report last Tuesday.I suspect the USDA is waiting until the March 31^st stocks report to see what remaining supply is left in the US to make any changes to demand estimates.

USDA Updates Sorghum Demand
The USDA did acknowledge a big issue with sorghum this month. Exports decreased 70-million bushels and feed demand increased 50-million bushels. This should be something to keep an eye on as sorghum is a direct feed competitor to corn.

While many market participants think the corn export estimate should be increased, this 50-million-bushels of sorghum added to feed may offset some corn for feed if corn exports are increased. Add to that, the increasing wheat carryout and the 35-million-bushels of wheat that have already been added to feed year over year, and potentially any corn export increase will be offset by feed decreases.

US Exports Uncertainty
There is also growing concerns of a potential executive order that will impose a $1 million dollar docking fee at all American ports for any Chinese built or flagged shipping vessels.20% of the world’s commercial shipping fleet and 50% of the ships built in the last 25 years fall into this category.Should this docking fee be imposed it could make it more expensive to export US grain abroad compared to South American or Black Sea grain.

While other countries’ ships could still presumably load in the US, it would still likely increase shipping costs because the demand for those other vessels would be higher.There still seems to be more questions than answers on this issue currently.

Plus, this week the European Union put new tariffs on US soybean and corn products in retaliation of the Trump administration’s tariff increase on certain products from the EU.

The uncertainty of the trade policies surrounding tariffs and reciprocal responses from other countries have the market on edge. Over the past several weeks hedge funds have exited about 50% of their length in corn. The longer these trade wars and uncertainty continue the less likely prices will rise significantly in the short term.

On a positive note, the price of US corn is still competitive globally, which should help keep demand strong and put a floor under current values.

Want to read more by Jon Scheve?
Are The Highs For Corn Already In For The Year?
Will Corn Rally Again? Can Corn Go Even Higher?
Could Wheat And The Retreating Corn Basis Be A “Canary In The Grain Bin? ”

Are The Highs For Corn Already In For The Year?

Mon, 10 Mar 2025 14:18:34 GMT

Market Commentary for 3/7/25

May corn started the week down 15 cents, likely due to the tariffs being implemented on the US’s 3 largest trading partners.Yesterday, values rallied with the news that tariffs on Mexico would be lifted for at least a month.This helped May corn finish the week similar to the previous week, but it is still down almost 50 cents from last month.

December corn closed the week at about the same level as last week too.This still leaves new crop corn down about 25 cents from the calendar year’s high.Some farmers have been asking, “are the highs for the year already in?”

History Says the Highs for the Year Probably Haven’t Happened
While it’s impossible to know for certain, the following provides some historical insight.The chart below shows which calendar month, in the year the crop was grown, that the December contract hit its high for the last 35 years.

Jon Scheve

(Marketing Against The Grain)

So far in 2025, December corn’s high was on February 20^th when it hit a tick below $4.80.Since 1990, December corn has never hit its high in February.90% of the time, it has happened after February, with 50% of the highs happening in May, June, or July.

In just the last 10 years alone, corn hit its high for the year 8 times in late spring or early summer. In the other two years, one was in January and the other in November.

Spring Insurance Price History
This year the spring insurance corn price is $4.70. Each year since 2001, December corn has eventually traded above the spring insurance price at some point.

In the last 24 years, December corn hit its high in January 3 times (2001, 2013, and 2024).In each of those years, December corn still managed to trade above the spring insurance average value at some point in the year.In 2001, it beat the insurance level by 1 cent in July.In 2013, it beat the insurance average by 8 cents in June.And in 2024, it beat the insurance level by 30 cents in May.

Bottomline:
While it is possible the high for the year was hit 2 weeks ago, history suggests it may be too early to be concerned about new crop corn values.There is still a good chance December corn prices could exceed $4.80 or even $5.00 in the next 6 months.

Want to read more by Jon Scheve?
Will Corn Rally Again?
Can Corn Go Even Higher? Could Wheat And The Retreating Corn Basis Be A “Canary In The Grain Bin?” Did Soybean Basis Top Out? Why “Free” Storage Programs Can Hurt Farmers Income Will Santa Bring A Price Rally For Christmas This Year?

Will Corn Rally Again?

Mon, 03 Mar 2025 13:29:30 GMT

In eight trading sessions, the corn market has lost nearly 50 cents per bushel. May corn is now trading similar levels as right before the January USDA report was published.

(Jon Scheve)

After the January report, basis weakened throughout the US, while the March / May futures spread widened. These are common signs of an upcoming futures value correction, which is what ultimately happened.

This means anyone who went long futures, on or after the report day, and did not liquidate their positions, are likely upside down and losing money on their trades.

Can Corn Go Back Up?
Export demand has been great, so this price decrease should keep US corn competitive globally until mid-summer. So far, US farmers have sold nearly 75% of their 2024 crop to end users and commercial grain companies. For that remaining 25%, I expect farmers will wait to see how weather is impacting the new crop in July.

Most end users will have good coverage on for at least another month. In the meantime, commercial grain companies will wait for basis to rally until early summer before moving their grain.But if basis rallies and the May / July spread tightens, there is a good chance futures could rally again.

Market Action
As I shared previously, I am 100% sold on the 2024 corn crop and had rolled my short futures position from the December to the March contract. On January 27 I rolled my March sales forward again to the May contract and collected another 10-cent premium.

This chart shows the December / March corn spread narrowing into the final month of trading.

(Jon Scheve)

After the January USDA report showed a tighter carryout than previously estimated, I was concerned how the March / May corn spread would react.Initially, I thought it could trade to 11 which was as wide as any value since harvest. However, on January 13, it went from over 10 cents back to only an 8.5 cent spread on January 17.

I was concerned it could narrow to 5 cents or even less, so when it moved back to 10, I took it. Unfortunately, as this chart shows, the spread continued to widen and pay more carry profits to store the corn while waiting for better basis values.

(Jon Scheve)

In hindsight, I should have waited until the end of February to roll my March futures to May, because it went to 16 cents. However, that would have been hard to know at the time. The market was showing a tighter carryout, and after watching the December / March spread narrow considerably in its final month, I felt it was better to exit with a guarantee of 10 cents additional profit. Plus, I thought 13 cents was the highest the spread would likely go, so risking 3 cents of potential wasn’t worth it to me at the time.

Does That Spread Premium Cover the Cost to Hold Grain in the Bin?
Corn’s cash value in my area at the time of the spread trade was $4.75. Assuming an operating note of 8% interest, it costs me 3.16 cents per bushel per month to hold the grain in the bin longer.

The premium I collected from the December / March spread had covered my interest cost from the wintertime until the end of March.With this new trade, I am making an extra 3.68 cents per bushel above my interest costs to hold the grain in the bin for any additional amount of time until the end of May while waiting for a better basis value.

Plus, I can still roll these May sales forward again to the July contract and potentially collect more premium while waiting for better basis values into the early summer if I so desire.

Bottomline
Currently, I have 100% of my 2024 corn production sold at what is basically $4.86 against May futures. While I would have liked to make a few more cents on the roll trade above, I’m comfortable with my current position.

Want to read more by Jon Scheve?
Can Corn Go Even Higher?
Could Wheat And The Retreating Corn Basis Be A “Canary In The Grain Bin?” Did Soybean Basis Top Out? Why “Free” Storage Programs Can Hurt Farmers Income Will Santa Bring A Price Rally For Christmas This Year? A Bullish Report, But A Bearish Response? https://www.agweb.com/opinion/bullish-report-bearish-response Corn And

Can Corn Go Even Higher?

Mon, 17 Feb 2025 12:59:38 GMT

Market Commentary for 2/14/25

The February USDA report was published, and like usual, it didn’t impact the market much.For the last 18 trading sessions, corn has finished in a tight $4.80 to $5.00 trading range.

What are some variables that could cause the market to move out of that tight range?

Weather
Argentina has been experiencing hot and dry weather with limited precipitation during the critical growth stage of their corn crop.Their yields will likely be lower than normal, but it is uncertain by how much.Current estimates range between 5% and 10%.

Mato Grosso Brazil, where nearly 50% of the second corn crop is raised, is facing the opposite problem with too much rain.This is delaying their planting season, which optimally happens in February.While the planting pace is behind, it isn’t too bad yet.Plus, a late planted crop doesn’t necessarily guarantee a yield reduction.

Exports
The US export pace has been very good and many market participants expect an increase in future USDA reports.This could keep a floor under prices moving forward.

However, there are concerns Argentina’s farmers haven’t sold much of their currently growing crop.As harvest approaches, they may feel comfortable selling more at these higher values.This could keep a lid on prices, especially if there is some well-timed rainfall over the next month.

Ethanol
Some traders have pointed out that ethanol production is higher than USDA estimates, and corn grind may be increased in future reports.If true, this would be supportive of current market values.

On the other hand, there is a bearish theory by a few market participants that this year’s drier corn is producing slightly more ethanol per bushel than corn with a higher moisture content in previous years.Therefore, these traders suggest that the corn used for the ethanol estimate could be decreased slightly in future reports.

Another bearish concern is that many ethanol plants keep improving their fermentation process efficiency each year, which produces more ethanol from each bushel they grind.The theory here is that there is no need to increase the corn used for ethanol in future USDA reports.

And finally, a lot of sorghum/milo is being ground for ethanol in the south.This is displacing some corn that now needs to find a different home.

Feed
Overall, US animal numbers are not up from last year, which makes it difficult to see feed demand increased.Plus, higher prices force feeders to consider alternative ingredients.The current wheat / corn spread supports the theory that feed demand will be lowered in future reports.

Bottom line
The USDA carryout number may have trouble going lower.Any export increase could be offset by decreased feed.This could mean the market will stay in the current trading range for a while.

The next big factor for a change in May and July futures prices will be the weather in Mato Grosso in April and May during the pollination stage of their second crop.

Want to read more by Jon Scheve?
Could Wheat And The Retreating Corn Basis Be A “Canary In The Grain Bin?”
Did Soybean Basis Top Out? Why “Free” Storage Programs Can Hurt Farmers Income Will Santa Bring A Price Rally For Christmas This Year? A Bullish Report, But A Bearish Response? https://www.agweb.com/opinion/bullish-report-bearish-response Corn And Bean Prices Continue To Go Nowhere