The 2026 growing season has been a challenge for Midwest farmers, with parts of the region experiencing extreme heat and dryness, while others faced excessive rainfall. September brought even more rain, with some areas receiving over 15 inches, making it one of Iowa's wettest Septembers on record. This erratic weather has led to concerns about harvest losses due to lodging, stalk rot, and disease, particularly in Iowa and Illinois.
The upcoming October 9 USDA report is highly anticipated, with private estimates suggesting larger crops. However, the excessive moisture may not have been entirely beneficial, potentially leading to harvest complications. Current corn stocks are at 2.10 billion bushels, 35% higher than last year, which could exert bearish pressure on prices. Soybeans, however, have a tighter supply situation, with old-crop stocks 3% below last year, potentially setting the stage for a stronger bullish argument.
Looking ahead, the developing El Niño could significantly impact grain prices, particularly for soybeans. A powerful El Niño often shifts rainfall patterns, potentially benefiting Argentina but causing planting delays or flooding in southern Brazil. Additionally, weather models suggest a rapid transition from El Niño to La Niña by summer 2027, which could make the 2027 Midwest growing season particularly volatile.
Jim Roemer, meteorologist and commodity trading advisor, suggests separating the grain outlook into two acts: Act I focuses on harvest 2026, with big supplies and better harvest weather likely exerting bearish pressure, especially on corn. Act II, from winter through summer 2027, could see increasing upside risk due to South American weather patterns, falling U.S. stocks, and a potential ENSO transition.