US Harvest Outlook: Corn Market Bearish, Soybean Market Bullish

The US fall harvest has begun, and it's time to analyze the Cost of Carry tables for insights into market trends. This concept, also known as The Gamblers' Secret, helps determine when to hold or sell grain supplies based on commercial traders' needs. As Kenny Rogers' famous character said, 'You've got to know when to hold 'em. Know when to fold 'em. Know when to walk away and know when to run.'

The Cost of Carry tables calculate the total cost of storing grain, including storage and interest rates. The table shows that as of August 7th, the September-December corn spread is bearish, likely due to leftover old-crop supplies and new-crop bushels coming in from early harvest areas.

However, the Dec-March corn spread and November-January soybean futures spread are neutral. The March-May spreads for both corn and soybeans are leaning bullish, indicating a tightening of supplies relative to demand in 2027. The May-July spreads for corn and soybeans are also bullish, showing concern over supplies during the spring/early summer of 2027.

US merchandisers seem comfortable with the current harvest yields, but once the main harvest is over, they become concerned about supplies meeting demand. This could be due to the US domestic crush running at a high pace and potential weather problems in Brazil's 2027 crop. The trend of percent of calculated full commercial carry covered has been increasing, indicating a larger percent was covered the past two weeks.