Gulke: Pre-WASDE Observations
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The market doesn’t often give a clear signal — positive or negative — going into a monthly World Agricultural Supply and Demand Estimates (WASDE) report. That’s the case again ahead of the August WASDE, scheduled for release at 11 a.m. CDT Wednesday.
My long-standing view of a long-term friendly bias that began in late August 2024 seems still to be in place, but it is waning in corn due to the peak on May 13 and a largely directionless trade during 2026. In fact, using a continuous corn price chart, the current front month is trading at roughly the same level as the ends of February and November 2025 — and even December 2024.
While the market gained $1.25 from August 2024 to Feb. 21, 2025 — the high for 2025 — subsequent rallies have not exceeded that February 2025 high, not even on May 13, 2026. There is something psychological about the $5.00 level as it pertains to the leading trading month that depicts demand. The Aug. 12 WASDE report will have work to do to deliver a fundamental shock capable of pushing prices back into an uptrend over the next nine months and setting up another spring high in May 2027. The stars may be aligned to do that, but it will depend on corn demand continuing to rise, possible China purchases in late 2026 and/or a crop problem in Brazil or Argentina. All of those could happen — but first, we have to put away 2 billion bushels of carryover that someone has to get paid to store.
On storage: The futures market is trading at a 40-cent premium to September for March delivery. Corn in farmers’ hands is worth about $75 an acre for those acres of production still unsold, representing an opportunity to hold old crop and sell new crop out of the field if storage is needed. The March 2027 corn futures contract, ironically, made its high on May 13, 2026, at $5.13 — then failed to hold and has since retraced. There is something about $5.00 corn futures.
It is doubtful China wants $5.00 corn, and that level appears suspect for others as well — except Mexico, which recently purchased corn for 2027-28 delivery, presumably through the first quarter of 2028, at $4.75. Close enough to $5.00. What do they know about corn’s future that makes $4.75 a good place to start coverage 18 months out? I could offer some rationale, but that would mean giving away secrets and some out-of-the-box thinking the market isn’t yet ready to accept.
Soybeans, on the other hand, seem to carry more of a positive attitude than corn — and for good reason. China has committed to buying soybeans while keeping its corn intentions rather vague. Soybeans are trading above the August 2024 low, and unlike corn, they have made new highs roughly every three months, printing $12.50 in September futures just three weeks ago. That leaves soybeans still up $3.00 — or $150 per acre — from the paradigm shift in August 2024. If producers believed that scenario playing out two years ago, what do you think they planted more of this year?
Wednesday’s planted acres estimate is expected to show more soybean acreage, driven by financial pressures — even as producers believe they can make more money planting corn.
So, there you have it: There will likely be a surprise in the pile of manure, and it won’t be a pony for everyone. I’m not a fan of options — most of the time, they expire worthless, especially calls. A September at-the-money corn put and call option each cost about 8 cents. September soybean at-the-money options run about 12-13 cents each. That’s not cheap, but if the reports are bearish and we planted too much of everything, it may be some time before we see $5.00 corn and $12.00 soybeans again. Maybe owning both a put and a call is the right option. Both expire in 10 days.
If the report doesn’t hold a surprise for someone, then it was a waste of time and energy to try to anticipate it. The survey is based on what farmers think, some satellite data and no boots on the ground. Pick your poison — I picked mine. Regardless, I have to wonder whether it wouldn’t be best to eliminate the August WASDE altogether.
Jerry Gulke can be reached at (707) 365-0601 or by email at Jerry@gulkegroup.com
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