MARKET UPDATE

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You can scroll to read the usual update as well. As the written version is the exact same as the video.

Timestamps for video:
Overview: 0:00min
Typical Summer Rally: 2:00min
Corn: 4:50min
Soybeans: 9:40min
Wheat: 12:40min

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Futures Prices Close

Overview

Grains mixed following yesterday’s blood bath.

Yesterday July corn posted it's largest daily loss since June 2023. Erasing the entire April rally and closing at it's lowest levels since December of last year.

What happened?

There is a few reasons.

For starters the US declined Japans proposal for a trade deal. Japan is our 2nd largest corn buyer. So this didn’t help out prices.

But the main reason is the weather.

Here is the next 7 days of precip from Nutrien Ag.

We are going to have a wide open planting window for the next week or so for most of the corn belt.

Getting this crop in the ground without any issues leads to no concerns about production.

No production concerns = pressure on prices

This favorable planting window should continue to keep a lid on corn futures short term.

However, we are a few weeks away from a dry forecast like this turning from bearish to bullish.

Fast planting means it is dry.

If it stays dry, that is how you get a weather rally opportunity.

Here is the outlook for June/July/August.

It still looks drier than normal. If this forecast holds true and this dry trend continues, we should see an opportunity.

Record Fast Bean Planting

Planting progress yesterday showed:

Corn

40% planted
41% trade estimates
35% last year
39% 5-yr average

Beans

30% planted
24% last year
23% 5-yr average

Why isn’t corn further ahead of pace if soybean planting is going so fast?

Soybeans are currently at a RECORD FAST pace.

Part of this is simply due to many farmers opting to plant soybeans first instead of corn.

The other part is because it's dry.

Chart from Karen Braun

What Does a Weather Rally Look Like?

A weather rally driven by drought is typically hard and fast (unless its a year like 2012 of course).

The market starts pricing in the drought so we rally hard for a week to a month, then rain comes and we give back the rally faster than we saw it come.

2023 is a really good example of a drought scare type of rally.

There is a "chance" we see similar type of price action.

I doubt we get a $1.40 rally like we did in 2023, but I think we could see a similar type of pattern.

In 2023, planting was fast and going good. We continued lower until May 18th (which would be next weekend). This actually resulted in us posting new yearly lows in 2023.

After that, we saw the weather scare which led to a rally higher for exactly a month as we topped out on June 21st.

However, the actual rally really only lasted for 7 days. As from June 12th to June 21st we rallied +90 cents of the entire $1.30 rally.

Then just 9 days later on June 30th we gave back the entire rally plus some.

The point is, if we get any sort of weather rally you need to be prepared. As chances are it won’t last long. Especially given that the new crop situation isn’t exactly bullish.

Courage Calls & Re-Ownership?

Courage calls are not for every operation.

But July corn is now -40 cents off of it's recent highs near the lows for the year.

You can pickup $4.70 July calls for 9 cents or the $5.00 July calls are 3 cents.

The July calls expire in 45 days.

The $4.70 calls are a re-ownership strategy for those that sold corn well above where the market is currently at such as on our Feb sell signal.

The $5.00 calls are more of courage calls that are a cheap way for those of you that will struggle to make sales should we get a big weather scare. As when these scares happen, nobody wants to sell because they think we'll keep going higher. But having these helps give you "courage" to sell knowing prices could go higher because you made money on the call.

If you were someone who struggled to pull the trigger in 2023, this is a cheap strategy you could consider in case we see a similar scare.

Seems like a pretty cheap way to participate in the potential upside for the next 45 days if we do happen to get a weather scare.

To see if this fits your situation call or text Jeremey at (605)295-3100.

Today's Main Takeaways

Corn

Fundamentals:

Short term no, there is no reason for corn to rally.

I'm surprised we fell out of bed as much as we did, but there is also no real reason for us to go and make substantial new lows either ahead of growing season.

Given how wide open of window we have planting, I'm expecting us to be mostly sideways as we will not have a reason to move higher until a dry forecast affects production.

My current game plan is to be pretty aggressive if we get that weather opportunity.

History says we rally soon.. then we have just over a month before prices fall apart completely.

This is the past 20 years of price action vs Dec-25. It has actually been decently accurate up to this point.

I am going to be even more aggressive due to the fact that the new crop situation is currently pretty bearish because of how many acres corn stole from beans.

We have a USDA report next Monday that is going to show a record yield and a carryout of over 2 billion bushels.

Here is the current new crop balance sheet based on the Feb outlook numbers to give you a rough idea of the numbers we will probably see.

Monday will give us our first official numbers.

Based on the current numbers, if we raised the same 179 yield as last year we would still get a new crop carryout of over 2 billion bushels vs last years 1.5 billion.

(This is without changing any demand numbers. Yes that is the exact same spot we started out last year with. But you get the point. Without changes to demand, the new crop situation is far more bearish than the old crop).

Yes the old crop situation is bullish as we have a stocks to use ratio below 10% for the first time in a few years.

But at the same time, we are simply nearing the point where the only thing that matters is going to be weather.

The old crop story is soon going to be a thing of the past as the market shifts it's focus to new crop.

New crop is "projected" to have it's highest stocks to use since 2019/20. Altough this is just a starting point so it feels like the only way this has room to move is lower not higher. As it uses a 181 yield.

Until we see if we get that weather rally or not, aggressively making sales here because you think corn is going to $3.00 does not make much sense.

Why?

Most guys are near a price floor where if prices go much lower it won’t make a huge difference to their bottom line due to farm payments & crop insurance etc.

What happens if you sell all of your corn today at $4.40 then you don’t raise a trendline yield and come in below your APH, meanwhile prices rally?

Bottom line, it is far more risky to oversold than it is to be undersold from an economic standpoint.

We feel like your overall business profit has limited risk to the downside vs the upside potential.

Technicals:

I thought we'd hold $4.69 and we did not, which is disappointing.

There was reasons for it hold but I'm not going to be right every time.

This is why we've had several sell signals such as February 18th and April 10th. Sometimes the market doesn’t go our way.

I am not going to be alerting a full on buy signal like I did back in March at this level (not yet anyways).

We've held this $4.50 level all year long up to this point. Ideally bulls hold it again.

However, it wouldn’t shock me to see us drop another -10 cents down to $4.45. I don’t think we'd go much lower than that. I'd like to think we hold the blue box.

Why a drop to $4.45 wouldn’t be a shock:

March corn went off the board at $4.45

May corn is also right around that level, at $4.47 today and goes off the board next week.

We don’t have to, but sometimes we can see previous contracts come and close that "gap" where the previous one left. It is just naturally a target and magnet.

I don’t think it makes sense for Dec-25 corn to go and post new lows here either but it's possible if fast planting continues to pressure us for the next week or so.

Either way, our next long term target if we get a weather scare is going to be $4.84-89

$4.84 gives us back 78.6% of the May 2024 highs.

$4.89 is the golden fib extension of the April rally (meaning $4.89 is 161.8% of that rally).

Soybeans

Fundamentals:

Soybeans continue to find a little support from optimism about trade deals being made as well as hope for some US biofuel guidance. But it looks like some of that optimism especially from the trade deals is fading.

The market wants concrete proof of deals being made with China and is tired of trading every little headline. Regardless, we have until harvest to make a deal before it has a negative material effect.

Just like corn, fast planting usually means it's dry.

The new crop soybean market arguably has a cleaner path to higher prices than does.

Sorry to beat a dead horse the past few weeks, but this is really all that matters here going into growing season.

We will be getting the first official new crop balance sheet on Monday in the USDA report.

But based on the Feb outlook numbers:

The USDA is projecting a record 52.5 bpa yield.

The USDA is also projecting new crop carryout to be down -25% vs last year.

Do you know how tight the new crop situation becomes if yield slips?

A 50 bpa yield evaporates the entire carryout and would result in the USDA being forced to lower our demand. Prices have to go higher if you ration demand.

Here is the current new crop carryout with a 52.5 vs 50 bpa yield.

Here is a visual just to show how stupid tight things "could" get.

Obviously they do not have to. I am just showing you the possibilities.

This chart gives you a good idea of how much more bullish the new crop situation is compared to the old crop one.

Essentially the exact opposite of corn due to the acre shifts.

Technicals:

We fell back below the 200-day MA but are still right at that 100-day MA.

Bulls want to really that. As if we get a significant break below, our next stop is probably that red box.

Next target is still $11.04

Here is continuous soybeans.

For the first time in 1,036 days soybeans broke this downtrend that had marked some significant tops since 2022.

It marked our highs in:

June 2022
Nov 2023
May 2024
Feb 2025

This is a good sign looking that long term that perhaps soybeans have finally broken this brutal downtrend of lower prices and are ready to start moving higher.

For Nov soybeans, bulls are really just waiting until we break above that 200-day MA.

The 200-day MA marked our highs in May 2024 as well as our highs back in February.

A break and hold above it should confirm we're going higher.

Wheat

Fundamentals:

Wheat continues to be held back by an improving winter wheat crop with the recent rains as well as spring wheat planting being ahead of pace and not having any issues.

As spring wheat planting is at 44% vs the 34% average.

However, we just saw rain come to US growing regions, crop conditions improved yesterday, yet prices were higher today. Some interesting price action.

Sometimes when you get bearish news but a positive reaction to prices, it can be a good sign of things to come.

I still think wheat is undervalued here and I'm not going to be selling any at these levels and I just view the wheat market as having more upside potential than downside here at these levels.

Not much we can do here besides be patient and ready for the next opportunity like we had in February.

Due to the lack of headlines and driving factors, biggest thing I am watching is simply the charts.

Technicals:

Both continuous KC wheat and continuous Chicago wheat continue to hold their long term crucial support levels.

Here is Chicago.

This box has held since March 2024.

The wheat market isn’t dead just yet.

If we are going to bounce, this is where we'd want see it.