Commodity Markets
Seasonally Flat-to-Firm Markets
Seasonally, the national average basis markets for both corn and soybeans are relatively flat-to-firm from the first week of September through the last week of June, putting the spotlight on futures spreads.
As of this writing, soybean futures spreads cover more calculated full commercial carry than their corn counterparts meaning the opportunity to improve one’ s position is greater in soybeans than corn.
As of early August, short November futures hedges could start to be rolled out to January covering roughly 70 % of full commercial carry. The January to March, March to May, and so on. In corn, the nearby December to March futures spread covered less than 60 % in early August, with the deferred May to July at 31 %. This indicated there is less incentive to roll short hedges forward to improve one’ s price.
Theoretically, then, it would seem better to store soybeans and take advantage of the stronger carry through the spring and summer of 2026 while selling 2025 corn at or shortly after harvest, but we need to keep an eye on how markets change over time. As the song says,“ Cause every hand’ s a winner, and every hand’ s a loser....”
Producers Like to Store Corn
There are two glaring differences between theory and reality though:
• U. S. producers like to store corn and sell soybeans, regardless of what futures spreads are showing.
• Most U. S. producers don’ t have many, or any, short hedges in place heading into harvest to begin with.
Let’ s Talk Strategy
Which brings us to a more realistic discussion of strategy,
setting aside the last line of the song’ s verse,“ And the best that you can hope for is to die in your sleep.”
While that may seem the most attractive alternative at this point, let’ s find other strategies. If a producer has little to no expected production sold, either corn or soybeans, the futures spreads are indicating corn is less bearish long-term than soybeans. How do we know this? Again, corn futures cover less full commercial carry than soybeans.
Additionally, if we think about the position of noncommercial traders, this group has held a net-short futures position in corn and net-long position in soybeans for much of the spring and summer. If we see funds move to get back in line with fundamentals it would mean soybean futures would move lower and corn higher over time. If so, this would play into the more popular post-harvest strategy of holding corn in storage and selling soybeans at or shortly after harvest.
But like the song, maybe you too, will find“ an ace that you can keep.”
About the Author
Darin Newsom has been working with markets in general for nearly 40 years, dating back to Black Monday 1987. Over that time, he has worked in local grain elevators, first dumping trucks then as a merchandiser, before becoming a commodity broker and advisor. That eventually led him to DTN where he spent 15 years as the company’ s senior market analyst before going out on his own with Darin Newsom Analysis, Inc.
These days, he also has the title of Senior Analyst for Barchart. Along the way, he has developed his own way of analyzing markets in every sector, always proudly reminding people that he is not an economist.
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