Following the October WASDE and subsequent selloff, corn futures have settled into a relatively narrow trading range, while soybeans have continued struggling, breaking below $12.70 support and trading into the low $12.50s.
There hasn’t been a significant change in our fundamental outlook over the past week. Our emphasis remains on selling rallies and retracements rather than depending on new contract highs to advance marketing.
However, a relatively quiet market doesn’t mean there isn’t work to be done.
Here are several things occupying our attention as we evaluate opportunities and manage risk on behalf of our clients.
Where Our Attention Is Focused
• Is corn approaching a point where the risk/reward begins to change?
Following the October WASDE, our historical stocks-to-use versus farm-price modeling suggested a nearby corn futures-equivalent value around $4.75.
With corn now consolidating near that neighborhood, we’re evaluating whether the market has adequately discounted the larger projected supply.
That doesn’t mean we’ve established a low. Harvest pressure remains a consideration, and markets can certainly trade below their fundamental valuation.
But it does raise an important question:
At what point does protecting against additional downside become less attractive than maintaining exposure to a potential post-harvest recovery?
The answer will depend on each client’s existing marketing position, but it’s a question worth evaluating as prices search for equilibrium.
• Are we approaching a meaningful Cycle of Weeks low?
Both corn and soybean markets are within the window of expectation for a Cycle of Weeks low, with the ideal timing falling toward the end of this week or early next week.
For corn, November 9 marks the beginning of the center of its cycle window. Soybeans are running later in their cycle, with November 9 representing a potential expansion of the expected timing window.
We’re paying attention to how prices behave as these timing windows develop, particularly following the recent declines.
A cycle window identifies when a meaningful low may develop—not necessarily the price at which it will occur.
We’ll be looking for confirmation through price structure and market behavior rather than assuming a low is established simply because the calendar suggests one is due.
If a meaningful trough begins developing, it could influence how we manage existing downside protection and evaluate opportunities to maintain upside exposure into the post-harvest period.
• Are we maximizing the value of existing hedges and risk management positions?
We’re continuing to evaluate opportunities to improve existing futures hedges, HTAs, and option positions.
Corn futures spreads have widened enough to warrant consideration of rolling existing hedges into deferred months to capture additional carry.
For clients holding long puts that have gained value during the decline, we’re also evaluating opportunities to roll those positions down, recovering some accumulated option equity while maintaining downside protection at a lower strike.
Neither strategy requires a rally to potentially add value to the overall marketing position.
The market doesn’t have to move higher for us to improve a marketing portfolio.
• Does owning the physical grain offer the best economics?
This is becoming an increasingly important question as harvest progresses.
We’re comparing available futures carry, potential seasonal basis appreciation, interest expense, storage costs, and grain quality when evaluating whether physical inventory should be held into the post-harvest period.
At a 7.5% operating interest rate, $4.75 cash corn costs approximately 3¢ per bushel per month to finance before additional storage expenses.
The economics become even more significant for soybeans.
At a $12.50 harvest cash price, soybeans cost approximately 7.8¢ per bushel per month in interest expense alone. Add commercial storage charges of 6–8¢ per bushel per month, and the combined cost approaches 14–16¢ per bushel per month.
Over five months, that’s approximately 69–79¢ per bushel in combined interest and storage expense, before additional handling charges or other costs.
That’s a substantial hurdle for a post-harvest rally to overcome.
In some situations, futures carry and anticipated basis appreciation may justify storage. In others, particularly where commercial storage expenses or quality concerns are involved, selling the physical grain and maintaining some price exposure through futures or options may offer a more attractive alternative.
Owning grain and maintaining exposure to higher prices are two different decisions.
We’re evaluating both rather than assuming physical ownership is always the best way to participate in a future rally.
• Are better-than-expected soybean yields creating opportunities to secure profits?
As soybean harvest wraps up, we’re evaluating how actual production has changed each client’s breakeven and overall marketing position.
Consider an operation with a $13.00 per bushel breakeven based on an expected yield of 68 bushels per acre. That represents approximately $884 per acre in production costs.
If actual production comes in at 75 bushels per acre, the same $884 cost is now spread across more bushels, reducing the breakeven to approximately $11.79 per bushel.
At a $12.50 cash price, that’s roughly 71¢ per bushel above breakeven, or more than $53 per acre in potential profit, assuming the original per-acre costs remain unchanged.
That’s meaningful, particularly following the recent decline in soybean futures.
Higher production can create profitable marketing opportunities even when prices are moving lower.
In many cases, better-than-projected soybean yields have us recommending physical soybean sales to capture available profitability and eliminate additional storage expense.
However, that doesn’t necessarily mean we’re giving up on a post-harvest recovery.
Depending on the client’s overall marketing position, we’re evaluating opportunities to maintain price exposure on approximately 30–40% of production through futures or options, rather than continuing to own all of those bushels physically.
This approach allows us to separate two decisions:
Can we secure a profitable cash price today?
Do we still want some participation if soybean prices recover?
Those questions don’t have to have the same answer.
By selling physical grain and selectively replacing a portion of that ownership with paper, we can potentially capture available profits, avoid ongoing commercial storage expenses, and maintain a measured opportunity to benefit from higher futures prices.
Paper ownership still carries risk and expense, including option premiums or futures margin exposure, so the appropriate structure and amount will vary by operation.
The objective isn’t to maximize the number of bushels we continue to own. It’s to maximize the value of the crop while managing the risks and costs of ownership.
• What would justify changing our soybean marketing approach?
Soybeans have continued weakening technically, breaking below $12.70 support and trading into the low $12.50s.
While our current marketing plan emphasizes selling rallies toward previous highs, we’re evaluating what additional weakness might mean for remaining unpriced production and existing risk management positions.
We’re also watching for evidence that selling pressure is beginning to exhaust itself.
The objective isn’t to predict the exact low. It’s to identify the conditions under which we’d become more defensive or, conversely, begin seeing a more attractive opportunity to maintain upside exposure.
What This Means for Our Marketing Plan
Our primary objective remains unchanged from last week.
We’re looking for opportunities to advance marketing on rallies and retracements, while evaluating ways to improve the value of existing hedges, capture carry, manage downside protection, and preserve selective upside participation.
Not every client will benefit from the same strategy.
An operation with substantial on-farm storage and relatively little unpriced grain faces a different set of decisions than an operation with significant commercial storage expenses and a large portion of production still exposed to the market.
That’s why we’re evaluating these opportunities within the context of each client’s overall marketing position rather than making isolated decisions based solely on futures prices.
Grain Marketing Thought
The market doesn’t have to move for a marketing plan to move forward.
Some of the most valuable decisions in grain marketing occur when futures prices aren’t doing much.
Evaluating whether to roll a hedge, capture option equity, establish basis, store grain, or change the form of price exposure may not be as exciting as catching a major market rally.
But those decisions can have a meaningful impact on the final value of the crop.
Good grain marketing isn’t simply about predicting where prices are headed. It’s about continuously evaluating the opportunities available and managing the decisions within our control.
That’s where our attention is focused this week.
Have a great week,
Ron Wall
Flat Water Solutions, LLC