Corn, soybean, and wheat futures prices have traded in a relatively quiet, mostly sideways price pattern for much of October.
The government shut down silenced important reports from the U.S. Department of Agriculture and traders seemed hesitant to make any dynamic price moves without updated USDA supply and demand fundamentals.
Looking toward year end, at some point, the government will re-open, and future USDA report will become available. In addition to those World Agricultural Supply and Demand Estimates reports from the USDA, here are four additional fundamental news items should you monitor:
From a marketing perspective
The first, and most important fundamental to monitor is cash basis levels across the Midwest. Preliminary corn and soybean yields across the Midwest are extremely mixed and variable, with many producers suggesting an overall theme of harvest yields “less than last year.”
A surprise, since most of summer weather in the United States was viewed as ideal, and the corn and soybean crops were pegged on the August WASDE report to have jaw dropping record yields. However, prevalent disease in corn, and a hot and dry August in the eastern Midwest, may have taken its toll on the crop.
Normally at harvest, cash basis levels tend to stay wide. With freshly harvested plentiful supplies coming to town, many grain processors or grain elevators do not need to “bid up” for inventory. But, might that be a sentiment that could shift this fall?
Some basis levels are said to already be improving. Why might that be? It could be due to a variety of reasons.
It could be that in some areas of the country, the crop is smaller than normal, and so end users may be trying to pull in as much grain as possible, while prices are low. Another theory is that with the government shut down, weekly export sales, or daily large export sales are not being broadcast, so potentially some global end users may be gobbling up cheap U.S. grain while they have the advantage of being on the “down low” for transparency. Or a final hypothesis might be that farmers are harvesting aggressively thanks to conducive harvesting weather, filling bins at home first and they might take the overage to town toward the end of harvest.
The second fundamental to monitor is the value of the U.S. dollar. In January 2025, the value of the U.S. Dollar Index was trading near 110.00, and has trended lower ever since, now trading near 98.00.
A lower U.S. dollar can help keep U.S. agricultural exports more competitive (due to currency exchange rates). All you need to remember is that when the value of the U.S. dollar is down,
currency exchange rates make it cheaper for other countries to import our commodities. A lower dollar has a tendency to increase demand for corn, soybean and wheat exports.
The third item to watch is continued geo-political tensions. Monitor the ongoing war with Russia and Ukraine, as much global grain is produced in the Black Sea region.
Also important, Chinese trade negotiations, and monitoring the potential legal ramifications ahead for U.S. tariffs. The appeals court ruled recently that President Trump’s tariffs overstepped his presidential authority and the case will be headed to the Supreme Court for review, but will not be reviewed until early November.
The implications are that countries still negotiating the details of their trade deal, including China, are more likely to drag their feet with negotiations hoping the court will strike tariffs down. If the Supreme Court does rule against the president, countries that have been paying tariffs may ask for refunds.
Lastly, we need to monitor the fund traders. Who are ‘the funds”? They are traders who represent the big investment money that trades in commodities. Fund managers watch and monitor grain market fundamentals and technical chart aspects, as they look for opportunities to invest and make money.
When they are long (buyers) in the grain market, prices tend to trade higher, and there are usually underlying friendly fundamental components supporting grain prices, too. When funds are short (sellers) in the market, it is often due to grain supply and demand fundamentals that are shifting to bearish. Currently, they hold net short positions in corn and wheat.
The good news is that we can keep an eye on their actions. Every week, the government requires the funds to disclose the number of positions they bought or sold during the week. From there, we can track whether they are amassing a long or short position in the market. Of course, with the government shut down, we are unable to see a summarized weekly report, but it is possible to look at their daily activity, from which one can garner a potential trend.
Will they come sneaking back into the agricultural space as buyers in late 2025 and early 2026?
Prepare yourself…
The market is trying to digest multiple influences; a lack of USDA data because the government is shut down, lower than expected corn yields at harvest, and the possibility of funds buying back short corn and wheat positions.
Which way will the pieces of news ultimately fall and tip the price scale? Will prices rise higher due to unexpected lower supplies? Maybe the U.S. crop gets smaller on upcoming USDA reports due to the corn diseases this summer? Or, what if there is adverse weather in South America? Might we see an export demand uptick due to trade negotiations?
Or will a snafu in global economics, trade negotiations, or global geo-politics spook prices lower? My advice: Make a strategy that allows your farm to be prepared for either scenario. Don’t wait and see. Be ready to act on opportunity.
If you have questions, you can reach Naomi at [email protected] or find her on X (formerly twitter) @naomiblohm.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Carefully consider whether such trading is suitable for you in light of your financial condition. Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. Total Farm Marketing refers to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. Stewart-Peterson Inc. is a publishing company. SP Risk Services LLC is an insurance agency and an equal opportunity provider. A customer may have relationships with any of the three companies.
