Following the substantial price correction we’ve experienced in corn and soybeans, we’re evaluating several adjustments to our marketing plans and existing risk management positions.
We’ll likely be distributing updated corn and soybean Market Plans this week, outlining the opportunities we’re targeting and the changes we’re considering as we move further into the post-harvest marketing period.
The correction has changed the relationship between price, risk, and potential reward. At the same time, actual harvested production is changing the economics of many individual operations.
Here’s where our attention is focused this week.
Where Our Attention Is Focused
• Our Market Plans are being adjusted to reflect the recent correction.
With corn and soybean futures having declined substantially from their previous highs, we’re adjusting our expectations for the next meaningful rally.
Rather than depending on new highs to advance marketing, we’re looking for opportunities to sell retracements toward previous price levels.
Our updated plans will target advancing corn to approximately 60% marketed and soybeans to approximately 70% marketed on a suitable retracement rally.
That doesn’t mean we’re recommending additional sales simply because prices have declined.
We’re identifying opportunities to advance marketing if the market provides a recovery, while evaluating whether existing protection should remain in place until that opportunity develops.
• Are actual harvested yields changing your cost of production?
As harvest wraps up, one of the most important things we’re evaluating is how actual production compares with pre-harvest expectations.
Better-than-expected yields can substantially reduce the breakeven price per bushel, even when total production costs remain unchanged.
For example, an operation with a $13.00 soybean breakeven based on 68 bushels per acre has approximately $884 per acre in production costs.
If actual production reaches 75 bushels per acre, that same cost is spread across more bushels, reducing the breakeven to approximately $11.79 per bushel.
That can turn today’s cash soybean market into a profitable selling opportunity, depending on local basis and individual costs.
We’re using FWS Precision to help visualize these changes in production, breakeven prices, marketed percentages, and remaining exposure.
In many cases, improved soybean production has us considering physical sales to capture available profitability while maintaining selective upside exposure through futures or options.
A lower market price doesn’t necessarily mean a less profitable crop when production exceeds expectations.
• Are existing hedges still providing the best risk/reward?
This is becoming an increasingly important discussion.
Managed-money traders have substantially reduced their corn net-long position during the recent correction. That liquidation has contributed to selling pressure, although the latest report also shows funds adding new short positions.
We’re asking whether the potential downside protection provided by existing short futures hedges or long puts is still worth carrying forward relative to the opportunity that may develop on a retracement rally.
For some clients, particularly those with substantial cash grain remaining to sell, it may be worth considering lifting a portion of existing paper protection and looking for an opportunity to price physical grain on a recovery.
The same evaluation applies to soybeans.
However, lifting protection restores downside price exposure. If the market continues lower before a rally develops, the operation bears that risk.
This will not be a universal recommendation.
The appropriate decision depends on the amount of physical grain owned, the percentage already marketed, existing hedge profitability, remaining downside exposure, and the operation’s ability to tolerate additional price weakness.
We’re evaluating those tradeoffs client by client.
• Managed-money positioning in soybeans presents both opportunity and risk.
Despite the recent soybean price weakness, managed-money traders continue holding a substantial net-long position.
That creates an interesting situation.
On one hand, the willingness of speculative traders to maintain significant long exposure may reflect continued confidence in the soybean market’s underlying fundamentals and recovery potential.
On the other hand, those positions represent potential selling pressure if funds continue liquidating.
We’re paying attention not just to the size of the net-long position, but to whether funds are reducing existing longs, establishing new shorts, or beginning to rebuild ownership.
The distinction matters as we evaluate the probability and sustainability of a soybean recovery.
• Are we approaching a meaningful Cycle of Weeks low?
Both corn and soybean markets remain within the broader period in which we’re looking for a Cycle of Weeks low, although their timing differs.
Corn is currently within its expected cycle window, while soybeans are becoming increasingly late in their anticipated cycle.
For soybeans, November 9 represents a potential expansion of the cycle window. Corn also approaches the center of its expected window beginning November 9.
We’re watching how prices behave as these timing windows develop, particularly following the substantial correction in both markets.
A cycle window tells us when to be alert for a potential turning point. It doesn’t tell us that a low has already been established.
Price structure and market behavior still need to provide confirmation.
The combination of cycle timing, recent price weakness, and managed-money positioning is especially relevant as we evaluate whether the risk/reward of maintaining existing downside protection is beginning to change.
• Are spreads and basis creating opportunities independent of futures prices?
Corn futures spreads continue deserving attention as we evaluate opportunities to roll existing futures hedges or HTAs into deferred months.
Capturing additional carry may improve the overall marketing position without requiring an increase in flat futures prices.
We’re also seeing the seasonal transition toward improving basis on a national scale as harvest pressure begins to subside.
That’s a normal development for this time of year, but its timing and magnitude will differ by location.
We’re evaluating the combination of available futures carry, potential basis appreciation, and the cost of holding physical inventory to determine where storage adds value and where selling physical grain may be the better alternative.
The important consideration isn’t simply whether futures prices recover.
It’s whether the combination of futures, basis, and carrying costs provides an attractive opportunity to improve the final cash price.
What This Means for Our Marketing Plan
Our updated Market Plans will be distributed this week.
The primary objective is to prepare for a retracement rally that allows us to advance corn marketing toward 60% and soybean marketing toward 70%.
At the same time, we’re evaluating whether existing short hedges and protective puts should be maintained, adjusted, or selectively lifted as the relationship between downside risk and recovery potential changes.
We’re also incorporating actual harvested production into our assessment of profitability and remaining exposure.
The objective is to have our decisions prepared before the market presents the opportunity.
Grain Marketing Thought
Sometimes the most important marketing decision isn’t whether to sell more grain. It’s whether the protection you already own still makes sense.
Following a substantial market decline, the economics of an existing hedge can change considerably.
A position that made sense when futures were substantially higher may deserve a different evaluation today.
That doesn’t mean abandoning protection simply because prices have declined.
It means continuously asking whether the potential benefit of maintaining that protection justifies the opportunity cost and remaining risk.
The same principle applies to physical grain ownership, storage decisions, and the opportunity to capture profits created by better-than-expected yields.
Good grain marketing isn’t about defending yesterday’s decisions. It’s about evaluating what makes the most sense from today’s position forward.
That’s where our attention is focused this week.
Have a great week,
Ron Wall
Flat Water Solutions, LLC