2026 farm cash flow shift: Weekly market outlook Nov 10-14

Andy

Hruby: Welcome everybody to the Ag View Pitch weekly market outlook for November 10th through the 14th. Today you have Andy Ruby with Jared Creed. Jared, how are you?

Jarod

Creed: Doing well, as always, Andy. Appreciate the invitation.

Andy

Hruby: Yeah, thanks. Thanks for coming on. And I thought it would be good to have you on as, as we rolled into November and guys are coming to Point Rose with, with harvest, and we kind of start thinking about other stuff within the business we need to be working on. And crop insurance is one of them as we, you know, as we get bins measured and tally up delivery receipts and all that. And now I'll just kind of leave that open. As you know, as we finished harvest, we have a harvest price set at $10.35 on beans and $4.22 on corn. What, what do producers need to be thinking about as they get back in the office?

Jarod

Creed: Well, for starters, you know, obviously from spring price to harvest prices on corn and soybeans was not all that big of a drop. Basically, you know, 95% of APH needed to be produced. If anything higher than that, you know, 85% policies are not triggering really on, on both corn and soybeans. Obviously, any coverage levels lower than 85%, that starts to change. That does not include any of the area-based coverages of, you know, ECO and SCO and margin protection and such. Obviously those are a little bit more regional based upon production in various areas throughout the nation. But, you know, to be honest, the insurance conversation presently is probably more important for 2026 than it is for '25.

Naturally, on '25, need to tally up, as you said, what production was, you know, with the FSA being shut down, for any of your wheat listeners, A little bit of an interesting predicament. You know, at least as of this hour that we're talking, it seems like the aviation shutdowns are really starting to turn up the heat in the kitchen. And perhaps we are— we're going to come out of the weekend out of a shutdown. Yes, I wouldn't be all that surprised. But I bring that up just because December 15th is really not all that far away. And there's a lot of acreage reporting that needs to be done. For your wheat listeners. But why I bring up, you know, why is it more important for 2026 right now? If there's a communication that follows talking to your insurance representative, it's probably the next phone call to the FSA, and it's to get your hands on your EZ-156s.

I know within our network and within extended network of other individuals that may be providing a little bit of, you know, education on some of this, there's— it's risking becoming a broken record, but the amount of money that is out there today in these farm program safety nets, coupled with maybe a little increase of optimism of what these insurance prices look to come in at in 3 months' time when we get to February for next year. The takeaway here is what I want to build off of is the revenue that the farm is trying to bring in on an annual basis. The timing of it and the way it's coming is shifting, and it's shifting really, really quick right in front of our eyes. From ad hoc programs— not a lot we can do to control that— farm program safety nets. There are some things that we can do to control, and then I'll come back to that here in a second.

Then what type of decisions is that going to create for me on insurance programs? We're 60, 90 days away from now, and that all spills right into what does my marketing strategy look like today? And I can't get off of this horse of saying that if I'm a 95 million acre corn farmer and a 90 million acre soybean farmer and a 40 million acre wheat farmer, I'm the one farmer in all the US between my insurance and government program safety nets. I don't know if I'm doing really anything on a marketing strategy, especially into next year. And I'm being a little careful about what the situation looks like for my 2025 marketing as well. Now, with that said, a big reminder on '25, you know, those safety nets are gone now on insurance. For the majority of the US, harvest prices have been set and we do not have that floor anymore, whether it's area-based or your own multi-peril insurance policy.

Those are gone. And corn, hey, it tried. I'm afraid corn is becoming the new soybeans. You're just going to stay in a tight, constricted range. Until some type of outside influence assisted to move to a different level. But beans was almost like a perfect situation. If a producer was dependent on safety net in place from insurance and farm programs, it got the individual through the first two-thirds of the month of October. And then we took off. The insurance programs, whether they do pay an individual or they don't, It worked exactly how you wanted them to. You did not have to panic for 9, 10 months of the growing season from February to present day. Now all of a sudden we're being afforded the opportunity to market a soybean crop above and beyond insurance prices at 18 to 20-month highs. That's it. I think the takeaway there— try to stop rambling here.

Takeaway there is there might be some individuals that look at these area-based coverages that they acquired for 2025 last winter and say, well, that didn't work. No, it did exactly what it should have done. It gave the safety net to not put an individual in a situation that they had to forward market grain at a, maybe a deeper loss than maybe where the market is at today. Because the safety nets provided a situation that the risk isn't there. So it's a very long-winded answer to your first question there, Andy, but I want to dig into one more piece. FSA. 2020-ish was the last year that I really gave a darn about base acres at the FSA. We made decisions every spring on, am I electing our county or am I making PLC decisions, at least in the last 3 or 4 years. 5 years ago it was a 5-year election, or 6 or 7 years ago I should say.

Now we're choosing it year by year, and with the changes in the Big Beautiful Bill, with the increases to the payment limitations, with the increases to the reference prices, it does not take all that much sizable of an operation to blow past payment limitations that are in place. And this is a touchy subject. I get it. You know, what does an operation do to stay competitive in the game they're forced to play? You were forced to play. You know, Chris, in your group, you guys talk a lot about farm transition. I'm not so sure that what is taking place right now from farm program safety nets shouldn't be viewed as a catalyst to speed some of that stuff up. Having greater payment eligibility from safety nets that are direly needed in the current input cost versus grain price environment that we are in.

And I think everybody would agree that you do not want to be the individual that on a per-acre basis is getting half of what the neighbor may be getting. At the end of the day, it's still games. There's competition. You have to, you have to thrive to survive, and EZ-156s are going to get you there. And as a reminder, for the crop that was just harvested or getting finished being harvested, not a lot we can do on that front. But the farmer is going to receive the higher of ARC-CO or PLC. That safety net does need to be considered a little bit on what marketing strategy looks like, at least for the next 60 to 90 days. Because once we get through the end of January, marketing year average prices will be 50%, maybe 65% established. And it gets hard to move that marketing year average after that.

But any type of sharp knee-jerk reactions in the near term is going to have an impact on that marketing year price as the farmer liquidates what they've harvested. And that just spills right over into 2026. Because we know already, absent of a big, big market move, we know what the ARC County prices are going to be for the 2026 crop that we are buying inputs for now, but the marketing year period for that crop doesn't even start until September 1st, '26. And if there's funds from it, it wouldn't be paid until October of '27. It goes back to my statement of probably more revenue than what the ag industry feels that is there today. There's more revenue there. It just comes at a different time, and I cannot emphasize enough just how important it is for, you know, the CPA and the banker to understand that the revenue's there. It's just coming in a different fashion and at different times.

Area-based insurance programs, if it's paying, that's next June. The cash grain that I have in the bin today, that's depending on what I do with it, the timing of selling. Farm program safety nets from the stuff we just finished harvesting. It's a far-fetched situation to say that there's not going to be a substantial amount of money that the farmer is going to receive in October of 2026 that is still impacted based upon price movement today. One big— it's like that commercial of the guy looking, shopping for the minivan for him and his family. All these different solutions just have to be able to boil it back into one big bucket of revenue.

Andy

Hruby: Yeah. Yeah. You know, I think it really emphasizes the point of, of cash flow projections. And, you know, as we start getting things that payments that are coming quite a bit later than we're used to, the importance of doing that so you can start saying, all right, well, this is part of my 2025 crop budget, and I need to allocate those dollars there, but I may not get that payment till later in the '26 or '27. And, and just really mapping out that whole cash flow side of it, because as if tight margins weren't an important time to do it, or it's not, you know, that it always is important. But that's— this just takes it to the next level of importance and, and detail that's needed. So I think that, you know, that was a really good point you made around crop insurance decisions and an overall marketing plan based on these changing dynamics that we have.

Let's kind of shift the conversation into corn and soybean. Go ahead.

Jarod

Creed: We will shift. One piece to add in there. Sounds like a lot of moving pieces. But back to my comment about being the one farmer in the US Andy, if I came to you 5 years ago and said, did you know that selling grain right now, in the next 3 months at present prices, is actually creating bad risk for you instead of taking bad risk off the table? That's a completely different world. Hindsight marketing is always going to be in front of us. We're never going to get past that. But when we miss out on what money would have came in a lower market, um, by— I sold grain, market went up. Yep, hindsight is what it is. But then at the same time, there's this other funding that would be coming to me if the market stayed lower that I'm not going to get now. It has nothing to do with how I marketed my grain or when.

It's just a matter of crop insurance, physical grain marketing, farm programs are all impacted by the Board of Trade. None of them are intertwined. They're all triple-digit-per-acre type of buckets. It's not chump change.

Andy

Hruby: Yeah, for sure. That's a good perspective on that. So what, you know, as we talk about the soybean market, I guess let's kind of start there. What, what's going on this week? You know, we're, we are recording this on Friday afternoon. The first 3 days of the week were awesome. We've seen a sharp sell-off yesterday, rebounded some today. What do you think's kind of driving this volatility?

Jarod

Creed: First driver is probably that the bean market was so lethargic for so long. It was until the end of October before we actually saw a single week that front month beans never traded at some time between $9.90 and $10.60 all the way back to July of 2024. So for the better part of 15, 16 months, the bean market just was constricted to a 5 to 7% range. And then we're finally starting to get catalysts. And these catalysts always run the risk of headlines helping or hurting. Just pick the day. Presently, There's probably a belief that the U.S. soybean yield has a little bit room to come lower, probably not all that much. We're going to get a WASDE a week from today on November 14th. Where that directive is coming from, nobody really knows. It's a little, I don't know, tinfoil hat. It's kind of odd to be forcing the World Board and NAS to go do this work and not get paid.

That's, that's a sad truth of the situation today. As much angst as there can be in the farm community towards USDA, but the belief of China increasing their soybean import numbers and other commodities from the US as of now is nothing more than a belief. Now, there's probably some argument in the cash market to say that we have been selling and trying to start the shipment process of beans to China. 12 million ton number that was thrown around for 2025 calendar year. Is very interesting. I don't think that we even have the logistical ability between our corn export program and what we do have for soybean export program to keep everything whole, sell it now, and get it all shipped before the next marketing year. That's a huge task. It's a huge task to accomplish. It would be quite the feat if the U.S. infrastructure was able to do so.

But again, back to that word belief that, okay, we're going to further tighten our soybean balance sheet. Remember, fair listeners, there's 40 million bushels per million metric tons. 12 million tons, 480 million bushels. We are not going to just cut our supply by— or our carryover by 480 million bushels. Starters, we don't have that for a carryover. The odds are heightened that if we are legitimately going to be selling these beans to China, it's probably replacing some business excluding China. The last year or two, we've kind of become accustomed to a 10 to 11 month prime export window to everybody excluding China. The luxury of having China in the U.S. market is that they can take such a large amount of volume in a very short amount of time. And that's, you know, that's Basis 101 as well. Lots and lots of angst around cheap, cheap basis values across majority of the northern U.S.

for the last 60 days, and they have rebounded dramatically because there's business being done. Unfortunately, with the government shutdown, we don't get weekly export sales. We do, however, still continue to get weekly inspections. You have an export sale announcement and you have export inspections. Inspections is basically the follow-through of what was sold. Has it been shipped? And you're constantly measuring what's our outstanding sales book versus our inspection pace. Got to say the word one more time. Belief. I'm just as— want to be as optimistic as everybody else that we've got something figured out now. We are legitimately going to sell and ship 12 million tons of the '25 crop to China, and we're going to do 25 million tons in the next couple of years.

Maybe we can applaud, if that's the right word, how the agreement is supposedly— agreement structured that they're talking about volume instead of dollars. But remember Phase 1, it was dollars. And, you know, you can go down a rabbit hole if you want to say that it was accomplished or not. But there's been little tea leaves of suggesting that, you know, maybe things are just a touch better. There's been some walking back of some of the tariff nature of the tariff impacts between both Chinese tariffs on the US and US tariffs on China. But again, I think it's just a belief, a lethargic market that never really provided a lot of opportunity. And Now we've got a little volatility in the market.

There was a day, the day following President Trump and President Xi's meeting that had been beginning last week— kind of losing track of time here— that we traded almost 800,000 contracts of soybeans in a single day. And I believe that's a record high by quite a bit. That is good, but it's bad at the same time. You, uh, You got to respect a demand-led market, and we need to see that demand really show up consistently in government reports. And that's where I go back to the WASDE next week. That has a catalyst. It does have a catalyst. If the World Board legitimately increases exports, probably already had some cushion in there for its expectation of Chinese bean business being done. Little bit of changes to the production side on both corn and beans. Who knows? We don't spend a lot of time between $11 and $12. No secret, been talked about a lot for the last week or two.

I would not be surprised that come Thanksgiving, or maybe Christmas, beans are $10 or they're $12. Not in between. They're $10 or they're $12. Yeah.

Andy

Hruby: No, it's— there has been a ton of talk around that. And I agree. So it's, you know, it's kind of keeping that in mind is, I think, generally, we want to be optimistic and say, okay, this is all going to go through and, and beans are going to take off. But, you know, knowing the implications if this thing does turn down into the 10s is, is what's that look like for you as a producer and How does that affect your bottom line?

Jarod

Creed: I think a nice piece that we would like to see happen in both beans and corn here, it's been a minute since we've really had an opportunity to talk about 2 years out type of market. Can a situation evolve that allows a guy to turn the balance of this year's crop into cash, really good chunk for marketing at $26 and getting that first jag at $27 done? '27. Really, it's crazy to say 2027 crop marketing. It's right around the corner. It's right around the corner. And I don't know what that round number needs to be. I have a feeling that $11 cash next year's beans would buy a tremendous amount of beans from the US farmer in advance. I don't know if it makes us money. It gives us a shot because inputs are still awfully high. But it's a lot better than 9, that's for sure.

Andy

Hruby: Right? Right. Yeah. As we think about the corn market, I guess, is there— what thoughts you have there? You know, it definitely hasn't had the volatility or the excitement or, or news that the soybean markets had the last couple of weeks. But it almost feels like maybe this, this bean market has pulled corn up some with it. Is there any validity to that?

Jarod

Creed: I think that's very fair. We've struggled to get above $4.30 and quite frankly, maybe even struggled to stay above $4.30 on the December corn contract. That's $0.40 off the lows. In essence, that's $0.40 and change off the highs from the beginning of the year. So I guess when you think about things just staying that tight of a range, it kind of leaves— it leaves the cash market to get ownership from the farmer. You know, it ends up leaving it to basis and spreads. And Eastern Corn Belt basis is absolutely on fire, just massive increases over the last 30, 45 days. River system reflects it as well. Rail bids where the corn is not excessive is reflecting that as well. So I mean, quite honestly, if you look at everywhere outside of like South Dakota, Kansas, basis levels have been doing nothing but firm. And so has cash— excuse me, spreads.

That, that in itself, in years and years where the history suggests that maybe the board's getting ready for some type of movement. But it might take a lot of time. You know, there's going to be places, I'm afraid, this year in Western Corn Belt that Kansas has a big crop, and there are big, big areas that probably not even going to start till after Thanksgiving, starting harvest after Thanksgiving.

Andy

Hruby: Wow.

Jarod

Creed: That was big. It was wet. They have a crop that is going to have a long tail. There will be January corn harvest in the state of Kansas this year. Why am I bringing up Kansas? Well, if you move the needle with Kansas and South Dakota as a whole, they're kind of the leaders in the clubhouse this year, in my opinion, for the nation, uh, from a percentage of what is normal, uh, boom or bust environment. Well, this year they're booming, and they're booming on all cylinders. So there's a lot of belief in the corn market that we need to lower the yield. Uh, I don't disagree with that in any way, shape, or form. I think you could probably argue that there's legitimacy of the idea of the yield being as high as 185 and legitimacy as being as low as 179 to 180. I don't know if that matters anymore, though.

Maybe since we haven't got government reports here for a couple of months, it creates a little additional volatility on the November WASDE. But we've got a lot of fluff in the residual side of the balance sheet. So what is a perfect world in corn look like today? We need to fire on all cylinders of pushing as much of this out of the country as fast as we possibly can. We need to feed as much as we can, as fast as we can. And we need to crush in the ethanol side, every single bushel we possibly can, maybe before January, because if we start to lower the production sooner rather than later, we're going to see nothing but cuts to the demand side. Supply and demand 101. I think you could, you could probably create odds that are not going to be great in your favor, that we're not going to move the US corn carryout that far off of 2 billion, 2.1, anytime in the next 90 days.

So corn runs a risk of being lethargic. Implied volatility is still so, so cheap. That is kind of an advantage to the farmer if they need to turn things to cash. And you get back to the consideration of farm programs. I can make a pretty good argument that any type of physical grain sale, as much as I hate saying it, gets quote-unquote re-owned a little bit via some type of call option strategy. It's real money, don't get me wrong, but quite frankly, if I sell it and the market goes lower, yeah, I lost my money on my call, but I'm getting more money from the government as well. I'm happy I sold it and I'm getting more. And maybe the, the biggest reasoning of leveraging some of those tools that have been around forever, um, should in theory allow a guy to take bigger swings.

If cash, uh, cash bids because the spreads and basis moves enough with the board not changing, um, you know, any guy, instead of letting 10% go, can he let 25-30% go on one swing, uh, and have something in his back pocket that's not going to hold a bunch of regret. So I would love— I probably said this to you before too— one of the things that I'm glad I don't do, I don't write commentary. I could not imagine writing commentary once, twice, three times a day in the current market because you've had some excitement to talk about here or there, but everything else has just been blah, nothing. Yeah, trying to recreate the wheel on nothing.

Andy

Hruby: Yeah, yeah, for sure.

Jarod

Creed: I agree, beans have probably helped corn to an extent. Um, the last piece I would add, as crazy as it sounds, wheat didn't— wheat didn't have a very good last couple days. So this week, uh, it's just 2 days. Wheat, in my opinion— keyword in my opinion here— is still the one that can lift all boats. If wheat wanted to do something silly and rally a buck, buck 50, uh, there's probably going to be some pretty good selling opportunities for the farmer. In that timeframe on all commodities. And last couple years, right about now through beginning of February, it seems to become our new April, May, June, July seasonal that we probably need to be on top of.

Andy

Hruby: Yeah, yeah, no, it's— I couldn't agree more. Just paying closer attention, a different time of year when we typically get distracted with holidays and post-harvest stuff. And yeah, so that's, that's good. Is there anything else you want to leave the listeners with as we kind of wrap this up?

Jarod

Creed: This is not a high confidence in this type of deal. But I think there's probably one more thing that we need to be thinking about for going into next year of just plain area, we're going to have more corn, we're going to have more soybeans from a combination of the two. Wheat's going to get cut, milo is going to get cut. And it's going to be, barring some type of Mother Nature massive implication on spring planting, we're going to make it easier to have more stuff because of the loss of a couple commodities coming off the table. And that's probably more of a western Corn Belt, and to a lesser extent, maybe the Ohio River Valley and such, maybe far, you know, your backyard up in Michigan a little bit here or there. But we're gonna have more stuff next year.

And as we continue to, you know, no pun intended, pile this stuff up in front of us, we need to have demand firing on all cylinders. So maybe, yeah, it's great to talk about a soybean program to China. What would really, really, really great if they decided to buy 500-800 million bushels of corn from us in the next couple of years. And that, that's a far-fetched assumption today. Would not be getting my hopes up on that. But I just think that if we go back to the idea that maybe November, December, January, February is going to be our prime optimum window for old crop, new crop, maybe new crop plus one marketing, prices rise between now and then. That's one more piece of just more and more acres. And whether you pull away a record yield or not, the cushion is that much higher. And now, okay, tinfoil hat.

Sorry, but because of the farm programs, and because of all the safety net increases on insurance and the increased subsidies, we are running a legitimate risk of making it easier for more stuff and probably killing implied volatility. When you kill implied volatility, that just means that your wild swings that present great opportunities, they just don't come around. Like we've been accustomed to for years and years and years, you plant more stuff, Mother Nature becomes that much less important.

Andy

Hruby: Yeah, that's, that's interesting as we, we think about that. I wouldn't say it's exciting and, you know, makes you feel good, but it's, it's the truth and that's what we need to know and need to be thinking about. So now I think that's, those are really good points. Jared, if anybody wants to get a hold of you, what's the best way to do so?

Jarod

Creed: Phone is always easiest. 402-680-1744. Cool.

Andy

Hruby: Well, that sounds good. Thanks for joining me. Thanks everybody for listening. We'll catch you next time on the Ag View Pitch.