About This Episode
A few weeks after the crude-led rally, Shay Foulk and Daniel Elsner describe a market that has stopped responding. Corn and beans tried to follow crude higher after a presidential speech, faded through the session and closed red. Elsner's phrase for it is headline fatigue: the same category of news that moved grain in March now lags, because prospective plantings came in at 95.3 million corn acres and quarterly stocks were up roughly 10 percent year over year in both crops.
The result is a market caught between two forces, a burdensome supply picture pressing down and geopolitical energy risk tugging up. Elsner splits 50/50 on whether the Dec corn high near $4.96 was the top, noting the 20-day moving average around $4.86 has been hard resistance and arguing that only a genuine weather event breaks through it. Foulk grounds the 2022 comparison by pointing out that corn was above $7 the last time crude spiked this way, a very different supply backdrop.
Where the grain sits matters as much as how much of it there is. On-farm corn stocks are up over 20 percent year over year while the extra soybean length sits in commercial hands, which tells Elsner that buyers have little reason to bid aggressively and that basis stays capped until farmers start emptying bins. With planting already finished in pockets of southern Illinois and a wet, cool forecast ahead, both expect progress to be tracked by word of mouth before USDA reports catch up.
“It'll be harder to get this market excited the longer the conflict drags on.”
— Daniel Elsner
Key Takeaways
The longer a geopolitical story runs, the less price it buys; expect diminishing reaction to repeated headlines
Compare a price spike to the supply backdrop it happens against before assuming a repeat of a past rally
Check whether stocks sit on farm or in commercial hands, because it tells you who has to bid and who has to sell
Large on-farm supplies keep a lid on basis until producers begin moving bushels
Use the 20-day moving average and prior highs as the resistance to watch when momentum stalls
An early top is a real possibility; do not assume the growing season will hand you a better price
Full Transcript
Shay: Welcome back everyone to another Sunday Market Outlook on the Ag View Pitch. Today you have Shay Foulk and Daniel Elsner with Cargill. Daniel, how are you today?
Daniel
Elsner: Doing well, how are you, Shea?
Shay: You know, it's April 3rd as we record this, we're headed into Easter weekend. Always exciting to get together with family and you know, celebrate the season if that's what you do. And we have some soybeans on the ground. And that's quite uncommon for us this time of year to have soybeans in the ground. Did you have much movement where you are kind of in Eastern Iowa and any planting early here before April or pretty quiet your way?
Daniel
Elsner: I heard some murmurs of some beans going in. Haven't heard anything on the corn side yet. But I do think some people were out there testing the planter and putting a few beans in here and there.
Shay: I gotta tell you, and this shocked me yesterday, I had some people in my office here. They said there are some operations that they know of in southern Illinois that are done. Not soybeans, not corn, D-U-N, done. And right or wrong, I guess I'll find out if that's what it is. But conditions were great there. And, you know, I think we're wet, we're cool after some of these storms have rolled through. So probably a good time time period to tap on the brakes there a little bit, I guess.
Daniel
Elsner: Mm-hmm. Well, that's— we'll see if that was the right decision or not.
Shay: But again, no endorsement. I just know that that is a fact. So, you know, looking at just kind of what we've had going on here the last 10 days, you and I were talking offline here. Seems like things have been quiet. There's a lot of uncertainty that's out there in the world, certainly, but definitely on the grain side of things. When markets close, Yesterday, you know, on the week, corn was down 17 for May contract, soybeans down, or had been down as low as 12, 12 under on the week, but kind of settled there in that mid-range. Looking out to Dec '26 on corn, still sitting at $4.81, Dec '27 sitting at $4.90. Nov of '26 sitting at $11.54, Nov of '27 is kind of ugly out there at $11.16. It just seems like there's not a lot to get excited about right now. Is it— are we in a sit-and-wait holding pattern here, or what do you think?
Daniel
Elsner: Um, that's what it feels like. Um, you saw crude oil, uh, the other day after, um, Trump's speech on Wednesday really rocket higher, and corn and beans tried to follow a little bit, just it did not have much enthusiasm. You're up a few cents, uh, pre-open, and then during the day you, you sold off and we closed in the red. So, um, a month ago when, if that speech were to happen, and we saw the headlines in Iran, corn and beans were pretty closely following crude. But this last time they were lagging behind. I don't think the enthusiasm was there. I think that's largely because of the reports that we got here this week of our stocks and prospective plantings. You had a big corn number come out for next year. It is on the higher end of estimates at the 95.3 million acres. Beans were 84.7, which was on the lower end of estimates, but still up 4% from last year.
And then I think the big kind of drag on the market right now is that stocks were up for both year on year about 10%, 10 or 11% for corn and beans. So you have a large old crop supply, probably still going to see a large new crop. Coming online here in 6 or so months. And I think that's kind of putting a lid on how far higher the market's willing to go on crude oil movement. So it does feel like we're caught between a burdensome supply situation. And then you do also have what's going on geopolitically and how that's affecting energy prices. And that's tugging us on the other end, but it seems like we're kind of stuck in the middle here. And, and the market doesn't really know what to do. So it feels like we're kind of in a holding pattern right now.
Shay: Yeah. And I mean, you look at the— I forget what it was, carryout number there. Do you remember off the top of your head?
Daniel
Elsner: For, for what? For corn. The last one from the last USDA was, I think, $2.3 billion for, for old crop. So I mean, that should be our carry-in for for next year.
Shay: Yeah, so I mean, 2.3, sitting a billion bushels over where we were kind of the same time last year, like you said, up to a 10% increase there. I mean, there's a lot of, there's a lot of corn in the countryside is what those numbers tell us. And so maybe not necessarily the drive to have the same purchasing incentive, same dollar incentive as we saw, you know, a lot of comparisons have been made back to 2022. We saw crude prices spike up $110, $120, $130. Well, corn was sitting at $7.20, $7.40. Totally different environment from a supply and demand situation, just to kind of keep people grounded on, you know, what's happening there and why.
Do you think that the price action that we saw with, you know, Dec corn getting up, touching up to $4.96 with some of that that we saw last week, there's a risk, and I'm asking if you think that this could be a distinct possibility that that could be the top? You know, we've kind of seen that last couple of years, early, early top. What are your feelings on that?
Daniel
Elsner: I'm not asking you to use your crystal ball, but I think it certainly could be. I mean, I'll give the middle of the road answer, 50/50. On one hand, just the technicals on the chart and what we've seen, you know, we've sold off a lot since then. You're sitting around $480. You've been struggling to break above the 20-day moving average at $486 there. On, uh, on Dec 26. Um, so that's, that's been a tough resistance point for the market to break through this week. Um, and with our new supply numbers that we've seen, I think the market just taking some risk off the table after these, uh, these reports came out that, um, you know, indicate, uh, good supplies for old crop and likely for new crop as well.
So I do see a situation where, um, you could have seen the top in at $4.98, But on the other hand, you're going into, you know, the growing season, I guess, for the guys that you're talking about that are already done. You're going into the planting and growing season at $4.80, give or take, off the Dec contract. And could you see a 20 or 30-cent move higher on some weather event or weather scare? You could. But we don't know. So I guess there's a possibility of testing those highs again and maybe breaking through. But I think we'll need some kind of big weather event for that to happen. So at this point, it looks like we're sitting good on corn supply.
Shay: And I guess I've referred to it as kind of the, you know, Iranian whiplash of, you know, one minute we're leaving, the next minute we're striking, the next minute we're finding a truce, the next minute we're, you know, it just seems like I don't even know if that— it's not baked in necessarily, but it's just more of an expected volatility, I guess.
Daniel
Elsner: Yeah. Headline fatigue.
Shay: Yeah. Headline fatigue, I think, is a good way to put it. So, you know, I don't know what it would take. I mean, it seems like it would have to be a distinct resolution of the conflict or withdrawal of, you know, pressure and strikes there to have any sort of meaningful move is kind of my indication from my, from my space here in Northwest Illinois.
Daniel
Elsner: I would agree with you there. I think for the Iran situation to really move our grain markets more, you'll need some pretty heavy escalation one way or the other, you know, on top of what we've already seen. And I don't know if that happens or not. But I think it'll be, it'll be harder to get this market excited the longer the conflict drags on.
Shay: So I want to ask this question from a farmer perspective, and then also from like a buyer perspective. A lot of times you have some sort of targets out there to have purchases completed up to, or, you know, sales completed up to 50% for farm operations by that mid-June, or 40% or 70%, you know, just kind of depending on what people's cash flow needs are and risk strategy and kind of marketing plan is. So from the farmer perspective, it's like, well, you're looking at— if you have storage, you're looking at potentially profitable sales in that $4.80 area for a good chunk of farm operations. Certainly, maybe some more upside potential there. I, you know, I can't predict that by any means. But it seems like we're not sitting at too terrible of a position headed into what appears to be a planting season with good moisture outlook.
You know, maybe once we get through this cool and wet period, how do you think about that from farmers positioning sales? I mean, we still got a couple of months left before June. And then how do you think about that from the buyer's perspective with so much corn left out there in the marketplace? Do they— I mean, there's really no reason to be aggressive with bids, is there?
Daniel
Elsner: No, I don't think so. I mean, you're going into planting time. So, you know, you'll see hot bids and pushes just to get needs covered if they're uncovered, you know, from the farmer side, if everyone's in the field. But yeah, I mean, your supply and demand tells you that there's plenty of corn out there. It's in the farmer's hands too. Your on-farm stocks are up over 20% year on year. So a lot of that additional stocks that we saw compared to last year is in the farmer's hand versus the elevator. Now soybeans is the opposite situation. Your off-farm stocks were up, I think, 16% year over year, but your on-farm stocks were, were, I think, about neutral, slightly lower. So the corn's in the farmer's hands, the beans is in the elevator's hands. But on the corn side, I mean, when is the farmer going to, you know, start to empty out the bins? That's the big question every single year.
But I think with that amount of supply around, it'll probably keep a lid on what basis needs to do.
Shay: As we do head into planting season here, and as we kind of wrap up, Daniel, what do you follow for planting progress? Do you just kind of try to keep a local eye out with your farmers and see how things are going? Or is there anything in particular that you watch just to track what overall planting progress is?
Daniel
Elsner: Yeah, a lot of it's just word of mouth locally, but the USDA will start doing planting progress here, or crop progress. I think this week, so we should start seeing weekly reports coming out from the USDA as well. And that'll help us all keep a tab on how things are going nationally. But yeah, from a local level, it's just talking with guys and seeing where they're at.
Shay: But you drive by in the morning and that field's not planted and you drive by in the afternoon and it's planted and never even, never even see a tractor out there. It's amazing how quickly we can get the crop in anymore.
Daniel
Elsner: Yeah, and a lot of guys I talked to can get it done in a week. So it goes in really quick these days. But we'll see, there's a lot of moisture in this forecast. So could drag things out.
Shay: But all right, Daniel, any, anything else on your mind as we kind of wrap up and head into April here?
Daniel
Elsner: No, I just hope everyone has a good Easter. Don't get too overwhelmed with the markets and everything that's going on. Spend some time with your friends and family and just, just enjoy it. And Don't, don't overthink things.
Shay: Yeah. Amen. Well, hope you and your family have a blessed Easter, Daniel.
Daniel
Elsner: You too, Shay.
Shay: Thank you. And thank you everyone for listening to another episode of the Ag View Pitch Sunday Market Outlook. We will catch you next time.