The US ag BRACE Industry has recently been squawking about a pollination problem with the 2025 US corn crop.
We can ignore this group for the most part while focusing on what the market has been and continues to tell us about REAL fundamentals.
Here we see, for whatever reason, some interest in US supply and demand next spring.
Does the 2025 US corn crop have a pollination problem? This seems to be the subject du jour with nearly every ag media outlet devoting as much time and space to the subject as possible. According to most of these media accounts, the US will be lucky to harvest one truckload of corn this fall, leaving the world in a crushing supply deficit while sending the market soaring to $42[i] per bushel[ii]. Now, if you believe all this, I have a mountain-top villa in south-central Kansas to sell you.
Why do I seem skeptical? After all, I’m no more an agronomist than I am an economist. But here’s the thing, many of the folks who are squawking about how the sky is falling in regard to the US corn crop couldn’t tell an ear of corn from a head of milo. Most of them are members in good standing of the BRACE[iii] Industry meaning they turn to whatever direction the USDA office is from them each morning and repeat their official mantra, “Everything is always bullish”. If it wasn’t a pollination problem it would be “not enough heat units”, or “it’s too hot”, or “it’s too wet”, or “it’s too dry”, or my favorite “the latest trade deals mean China is going to save US agriculture”. Huzzah! Huzzah!! Huzzah!!!
As a former long-time member of the ag media circus turned long-term investor, I’ve learned to ignore nearly all of what the industry has to say. It gives me a HIT[iv] advantage to listen to what the markets are saying rather than the cacophony screeching voices always present in the background.
Given all this, what is the corn market telling us in late July? As always, I’ll turn to our key reads on real market supply and demand: The National Corn Index[v], national average basis[vi], and futures spreads.
The National Corn Index ($CNCI) was calculated near $3.85 last Friday putting it in the lower 20% of its 5-year price distribution range[vii]. Based on the economic law of Supply and Demand, this tells us spot cash supplies are large in relation to immediate demand.
National average basis was calculated last Friday at roughly 14.5 cents under September futures and 34.0 cents under December. The previous 10-year average for last week was 14.75 cents under September with the previous 5-year (and 10-year) low weekly close for the first week of September at 30.0 cents under December.
Which leaves us with futures spreads. As you know, I use the price relationship between futures contracts to indicate how the commercial side is position based on its long-term fundamental outlook. A quick recap of what we’ve seen this past year:
Dec25 corn spent the 6-month period from the first weekly close last September through the last weekly close this past February buying 2025 planted area away from the Nov25 soybean futures contract.
The September corn contract, a hybrid issue[viii], showed its new-crop side during 2025 indicating those increased acres were planted early. The September-December futures spread posted a high daily close of 3.0 cents inverse on February 20, steadily falling to last Friday’s close of 19.5 cents carry.
Therefore, the market told us there would be more acres and those acres were planted earlier than usual. Since then, we’ve seen the 2025-2026 futures spreads (Dec25-Mar26 through May26-July26, summarized by the Dec25-Jul26 forward curve) tell us, to quote Paul Harvey, “the rest of the story”.
To get a better understand of what the market is saying, I track the trend[ix] of percent of calculated full commercial carry[x] covered by each spread and the forward curve. Here’s what the trends have done from the first weekly close of March through late July:
Dec25 (ZCZ25) -Mar26 (ZCH26) futures spread: 37% calculated full commercial carry (cfcc) to 57%. While still a neutral read, the larger percent tells us the commercial side is comfortable with the number of supplies that will be available in relation to demand during harvest. This same week last year the Dec24-Mar25 spread covered 46%.
Dec25-Jul26 (ZCN26) forward curve: 30% to 47%. Again, the increase has been consistent. However, here we see a low weekly close (high percent) of 48% the second week of July.
Mar26-May26 (ZCK26) and May26-Jul26 futures spreads: Here’s where things get interesting as both spreads have stabilized during July. The March-May reflects the reality of bushels being tucked away over the winter, meaning demand is expected to firm against available supplies. Further out, the May-July closed last weekly covering 30% cfcc as compared to its low two weeks prior of 35% and 36% the same week last year. Is the lower percent due to tighter supplies tied to pollination? Is it due to increased demand from ethanol, feed, and exports? All are possible. The reality is we don’t know. What we do know is the commercial side is keeping a close eye on longer-term supply AND demand.
This past week I had the privilege of participating in Barchart’s Grain Merchandising & Technology meetings in Ames, Iowa and Manhattan. At the Ames meeting, the other guest grains analyst Thomas Call, Senior Consultant of Commodity Risk at Mid-Co Commodities talked about how the corn market didn’t seem to have much downside risk at current[xi] levels and seasonal tendencies. I agree, based on my price distribution study and seasonal studies for December corn futures. At last Friday’s close, Dec25 was in the lower 23% of its 5-year range. At the Manhattan meeting Guy Allen, Senior Economist at Kansas State University discussed how corn could soon start to rally. As I’ve talked about over the past year, from an investment point of view, the Dec corn only continuous monthly chart showed a buy signal at the close of August 2024 with another possible at the end of this month, if Dec25 finishes above its June settlement of $4.2550.
So, does the 2025 US corn crop have a pollination problem? Maybe. Or maybe not. I’ll counter the braying BRACE Industry with this question: Does it matter? Recall Market Rule #5: It’s the what, not the why. The “what” in late July is commercial interests have been providing longer-term support. We’ll see what happens over the coming months.
[i] According to the Hitchhiker’s Guide to the Galaxy, “42” is the answer to everything. A tip of the hat to Scott K., one of my former editors back in the newsroom.
[ii] No, the US could never figure out the metric system the rest of the world uses.
[iii] BRACE = Brokers/Reporters/Analysts/Commentators/Economists who as a group have never met a USDA statistic they won’t quote or a make-believe story they won’t pass along.
[iv] Hedging-Investing-Trading
[v] National average cash price, intrinsic value of the market
[vi] National Corn Index minus futures
[vii] Based on weekly closes only. This shows us how often a market or contract posts a weekly close above or below certain price levels over a set period of time. It’s based on the idea there was value in knowing the upper and lower 33%. What I find more important is what it says about a market when we apply the economic Law of Supply and Demand.
[viii] Part old-crop, part new-crop
[ix] Simply price direction over time. No extravagant technical analysis necessary.
[x] The total cost, storage and interest, to hold supplies in commercial storage. The storage rate is set by the CME with interest the sum of the 90-day SOFR rate + 2.2125 percent.
[xi] Sorry Tony D.
On the date of publication, Darin Newsom did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
