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Will we see fireworks in the grain market?

Ag Marketing IQ: Three things to remember if this market comes to life: sell into a rally, get offers in place and maintain perspective.

Matt Bennett, Commodity analyst

May 3, 2024

4 Min Read
Getty Images/Vasita Bumroongwong

The corn and bean markets have been sideways to lower for the bulk of 2024. Double-digit rallies have been non-existent for corn and even less common for soybeans. While these markets have been as boring as can be, we’re entering a time of year when fireworks can happen – and we don’t necessarily have to wait till the 4th of July.

The funds have been short these corn and bean markets for the last several months. At times, they’ve looked destined for record short positions, but given the time of year, it’s not hard to believe they’d be covering those shorts. As of the time this is being written, my best estimate is funds are still close to a 200k short position on corn and a 100k short position on soybeans. It’s not common to see those numbers in the first week of May. Typically, the money managers like to be more nimble and able to react to weather issues.

So, do the funds cover all of their shorts? That’s a reasonable question that’s tough to answer. If history is any indication, a large net short carried through the whole growing season would be a big-time anomaly.

The corn crop is currently 27% planted, according to USDA, and beans are at 18%. Is this enough to get the funds worried that a major planting delay might happen? One thing to watch would be how far behind the eastern corn belt is.

While Iowa and Missouri are 39% and 63% respectively, Illinois had only planted 25%, while Indiana and Ohio were much farther behind at 8% and 6%. There’s no doubt the overall pace is acceptable for this time of year. However, with these three states running behind – with a wet forecast to boot, it’s not something to ignore.

Consider selling into a rally

So, the question at hand is what do we do if the funds indeed cover this entire short position? What kind of things do we need to be keeping at the forefront of our minds?

The best way to stick to our guns in this situation is to know our break-even levels which will give us a better picture of what we need to be doing.

I realize when ‘experts’ say we have a chance to rally to $5 or $6 on corn or $13 on beans it’s tempting to wait to make sales in the event we rally to those levels.

However, if I have one last bit of advice, it’s this: remember just a few weeks ago when it seemed corn was destined for sub-$4 and beans sub-$11. Keeping that perspective can help us avoid major marketing mistakes.

I know many of you haven’t started planting or are far from being finished. I hope the rest of your spring goes smoother than it has so far. Keep safe out there.

Feel free to reach out to me or anyone on the AgMarket team. Ag Market - Ag Market We’d love to hear from you.

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About the Author(s)

Matt Bennett

Commodity analyst, AgMarket.Net

Matt is a Windsor, Ill., farmer and former grain elevator owner. He is Channel Seed’s grain marketing consultant and holds a Series 3 brokerage license doing business through AgMarket.Net, Farm Division of JSA. He specializes in formulating risk-management strategies for corn, soybean farmers and livestock producers. A graduate of University of Illinois, Matt and his wife Tiffany live on the family’s centennial farm where they raise their five children.

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