October 19 – Market Commentary

The Week in Three Numbers

86,482 - The number of contracts managed money removed from their net long position in corn futures and options as of October 13.

10.46% - The amount of corn exports as a percentage of the USDA's 2026/27 forecast as of October 8. The pace needed to hit USDA's forecast is 11.54%, leaving us 1.08% shy of the pace needed.

70% - Percentage of the Kansas corn crop that has been harvested, down from the five-year average of 73%.

Market

Last week saw the row crops trade lower while the cattle market continued strengthening.

No row crops had a good week last week. Corn traded within a 12-cent band, steadily decreasing a little a time before closing down five. All three of the moving averages are now below the $5 mark. Soybeans saw quite a bit of volatility, flirting with $13 before eventually stair-stepping down to the lowest mark since late August despite Chinese buying. Wheat continued its nosedive, setting a second consecutive new bold red and closing down for the seventh consecutive week. Meanwhile, live and feeder cattle both set bold new greens, feeders for the second week in a row. Crude and diesel both shot up once again, both setting new bold reds. Crude is back over $100 for the first time on the chart and flirted with the 52-week-high. Meanwhile, gasoline dropped for the second consecutive week. That trend may be short-lived with the renewed strength in crude. In the financials, we have new bold reds in the S&P 500 and the 10-Year Treasury note as the old ones rolled off, neither of which were previously in the red column. The S&P will get another new bold red next week as the current one is scheduled to roll off.

Let's start with soybeans. Since setting its bold green number September 25, soybeans have closed the week down 40 cents, up 13 cents and down 31 cents. As of Monday morning, they're starting the week off down almost another 10 cents, which leaves them below the 20- and 50-day moving averages, which is traditionally a bearish sign. This has occurred despite China coming back in with purchases and the funds not selling off their long positions like they have corn. If there's a liquidation process, we could see much bigger drops.

As the harvest season progresses, reports have come in with stronger than expected soybean yields, easing some of the concerns over a very tight soybean market. Meanwhile, the National Oilseed Processers Association put out their report on crush last week, showing a disappointing 196.3 million bushels of soybeans crushed in September, well below estimates. Meanwhile, Brazil is estimated to be at a record production with over 181.6 MMT according to Conab. Rough.

Soybeans traded below the $12.56 support level a little last week and have opened up Monday morning below it. The chart just doesn't look great. We could see some additional support around $12.50 and just under, but then we're looking at around the mid $12.30s. If China stops buying or doesn't hit the commitments, it could get a lot worse.

Wheat continues its decline for a seventh straight week, despite news out of the Black Sea that grain shipments aren't getting out. That news isn't helping HRW exports as last week's Export Sales report showed a nearly 30% drop week-over-week in exports and almost 50% drop from a year ago. Reports out of Russia showed their October exports of wheat, barley and corn were estimated at just over 3 MMT compared to almost 5.5 MMT last year. However, there's a lot of wheat sitting around in the world and it seems that buyers are happy to sit on old stocks and outright purchase less. At least that's what WASDE indicated with their projection for less global demand. So, it doesn't seem, at least in the short run, that these reports of starvation or famine are close to coming true.

Unfortunately, corn hasn't been much better. If you don't count that last week of September in which corn closed the week up about three-quarters of a penny, we're on our sixth straight week of declining December prices. A market commentary I listened to Sunday evening suggested we needed to hold above the $4.73 mark as that's about the spot where you'd have lost two-thirds of the rally we got in August. Unfortunately, early on Monday, we blew past that and are trading in the high $4.60s.

The funds have also sold off about a third of their long positions, cutting out over 85last week. Since peaking in mid-September with record long positions, the funds have reduced their net long position by over 168 corn contracts. However, there's still a fairly large net long position in corn and soybeans of over 400 thousand. There's some real concern that if there's additional liquidation things could get worse.

So, things aren't exactly bullish as we look at the one-year chart.

This Monday in October of 2025 saw December corn close at $4.58, with moving averages of $4.58, $4.57 and $4.59. We're still a little higher now, but not by much, and until we get some additional news that might flip this bearish, there's not a great technical indicator suggesting we won't trade even to down.

We're still better than we were before the rally, so hopefully you were able to lock in some profit. Last week I mentioned we should have some support just under $4.60, which nothing indicates that's not still the case. But we still need good news if the market is going to reverse and with the potential for liquidation, there's no guarantee buyers step in there.

Some mixed news in the export world for corn. The USDA's Export Sales report from last Friday showed 1.122 MMT of new net sales for 2026/27, up almost 50% from the prior week, though down 15% from the same week last year. That's particularly concerning. The USDA has corn exports projected at slightly lower year-over-year. Sales have not come in fast enough to even hit that lower number. The negative news on this front is weekly exports lagged, showing only 1.362 MMT of shipments, the lowest since that first week of the marketing year.

The gap between where we are in terms of export pace and where the USDA is projecting us has widened slightly. Last week we were at 0.79% off pace - now we're around 1.08% off pace. It may not mean anything, but it wasn't a great week. We'll watch this week's report as it'll be the first Export Sales report covering a week after that October WASDE report.

Harvest continues to chug along, but with the wet weather over the past week, it's slowed down to below the five-year average.

Corn and soybean harvest looks like it could wrap up quickly this week as a pretty dry, albeit cool, week is forecasted.

The week ahead

The biggest question this week is where the bottom is on the row crops after we've largely liquidated much of that late-summer rally. We'll get our first full look at demand following the October WASDE with reports for Export Sales, Cattle on Feed, and Chickens and Eggs.

Stay safe out there!