Bulls Dig In as Heat, Demand and Fund Buying Fuel the Rally

After Wednesdays across the board breakout to new three-year highs for corn, beans and wheat, the overnight trade took a softer trade of consolidation before another round of mid-morning fund buying turned the losses into a mixed close with corn the weakest, beans fractionally changed while wheat jumped higher to make another round of contract highs. With a developing extremely hot finish for the crops as the US forecasts have a consistently added searing heat into September, the trade now has to add another level of potential weather problem along with diminished US/world corn yield, a lack of meaningful Black Sea grain exports and consistently strong demand, the bears have been run out of the market over the last two-weeks. Fridays are always interesting to predict in volatile markets. Tomorrow may actually be easier because it is the second to last day of the month, the end of the week, and first notice day for September futures. This combination of things (especially the end of month and end of week) technical breakouts should attract even more fund buying to help keep up the bullish momentum. The higher prices go, the more extreme volatility we will see, so take your heartburn medicine and let the markets sort an increasingly bullish grain and soy landscape.

News and Notes:

• The end of August and early September US forecast has turned much hotter and drier over the last 2-days and will add to the uncertainty of predicting final US yield. While the corn is past the point of getting help, the optimism that bean yields could be at trend (53) will begin to fade if a heat wave and a flash drought continue into mid-September. The winter development of super El Nino is becoming a larger part of the conversation for the funds decision to pile into grain and soy length.
• The daily December corn chart is on Page 2 and shows the 45-degree angle rally over the last 2-weeks that has added nearly 80-cents in twelve trading sessions. Today’s daily low was right at the uptrend trend line and saw a solid bounce. The lower close is a non-event, but the impressively overbought RSI (blue shaded area in the bottom box) at 74.06 is a consideration for upcoming day-to-day trade. With the funds long about 1.6-1.7 BBU there will be some profit taking and some position resizing at some point. That occurs in healthy markets and will not mean the uptrend is over. Expect volatility.
• Another important fund related fact to consider it that wheat has outperformed corn over the last 2-weeks ($1.18 to .81) but the funds are only holding a 150 MBU long in wheat. Expect rotation from corn to wheat by the funds to allow them to stay in the bullish grain trade.
• The weekly export bean total was at the high end of expectations showing recent Chinese purchases while corn and wheat sales were within estimates. All sectors of demand remain strong.
• The early week continuation of the bullish breakout and wheat’s explosion higher triggered four Sales Targets for ‘27 corn, ‘27 beans, 26 wheat and ‘27 wheat. The Sales Targets table on Page 2 has been updated with new price targets and new average prices. You have a chance to sell the highest prices in 3-years, don’t be stubborn about letting a few bushels go. Reward the rallies!

Volatility will soon take over as the dominant daily feature of the markets as the end user community will be aggressive to support breaks like we saw this morning, while prices are now high enough to entice producers holding on to old crop or behind on new crop to ease some bushels into the rallies. Both are healthy parts of any developing bull rally that hopes to have any durability. All participants in the marketplace realize that the US and world crops will not get bigger, which is forcing them to sit down and make some hard decisions if they can comfortably purchase or sell the huge rallies of the last 2-weeks. The funds indicated they will chase the rally as Wednesday’s volume was the second largest of the year. Farmer selling has been present but far more muted, but after the last tough 3-years of prices and cash flow, that is understandable. The speculative community has fully bought in to very tight world stocks, the high probability that the two wars will go on for a while and that the presence of Super El Nino for the southern hemisphere growing season will present a challenge to produce record or even trend yields. Raw material inflation has become the new bitcoin trade for the second half of 2026. Work on getting a good yield forecast for your farm, double-check your expenses and break evens, and put a marketing plan in place for harvest.