Table for the Friday, June 26th, 2026 installment of Market Plus. Shawn Hackett with us. Shawn, we flew through that segment, covered a lot of ground. We have a whole lot more questions to get to. Let's start right off the bat with Barry in Iowa if we could, because this sets the table for a lot of things. We didn't get a chance to talk about the USDA report, but you can discuss it here if you could. Is there much... Is there a bottom in this corn market? What's it going to take to get this thing headed back in the right direction?
I mean, if weather's going to be good, as we talked about on the main show for July, usually you don't expect the market and corn prices to really bottom and turn out around until August. So, can you get a short covering rally on heat wave next week? You know, I mean, there can be some reasons to get a short-term short covering rally, but I don't see a sustainable turn higher until we get to August.
Because July is usually that month where people are going, 'Oh, I got to clean the bins.' You always hear about it's tough. I've done it. It's... you get stuck and you just sell.
Do traders know that? Do they factor that in?
The seasonal pattern tells you that. Seasonal pattern says that we go straight down from, you know, late May into August because it's the seasonal pattern of I got to clear the bins, I got to sell, I got to pay bills. Yes, they know that and they take full advantage of it so long as, you know, July weather does not look ominous, which, as I said, a super El Nino, there's never been an example of that happening and I don't see this year being any different.
Okay. We've talked about before when a story ends up in the national press that comes from our sector of the world.
That means the rally is over, whatever. But super El Nino is a little different, right?
Why? Well, it's not like it's one week or it's two weeks. It's a six-to-nine-month affair is an El Nino, right? It develops, it strengthens, and it builds. And it's just not the, you know, we're all over. So, when we get past this summer and we look out to the fall, what does a super El Nino mean? It means a very, very wet harvest season, which of course producers don't want to hear about. Slow harvest, wet corn, but it also means extremely hot, dry central northern Brazil where 70% of the soybeans are grown in the first half of the growing season. That could be the big weather trigger to get the grain markets back on a different track than the one they're on right now.
So, yay North America, not so good South America.
Correct. 2023, the last El Nino we had, soybean yields were down 10% below trend that year. That was the largest decline in 50 years. And this El Nino is much stronger and the deforestation drying out effects of the Amazon monsoon is further along. We're very, very concerned that we could have a very unusual and rare crop problem for soybeans in the first half of the growing season in Brazil. And that's something to really watch.
Their first half of their growing season.
So, then are we going to change... is this a huge disruption coming?
Well, 70% of the soybeans are grown in the first half. 70% of the corn is grown in the second half and El Nino is going to continue to proliferate into the second half before it ebbs. So, second crop corn would also be significantly hurt. The last time we had El Nino, I think we were down 20% below trend. So, we're looking at really, really tough Brazilian crops. And what happens in Brazil, because they so dominate now the global trade, does not stay in Brazil. If one wants to look for weather and excitement in US grain prices, I would look to the fall and to fall next year. That's going to, to me, going to be the big, big story of El Nino, not this summer growing season.
Okay. Always something with you to write down to make sure I put in the note. That's a big one right there. Mark in Minnesota, let's go next here because this is another market we've struggled with. How much more downside do you see with the wheat futures market? Anything coming there to offer support? This was an email that came to us.
We had record high dry temperatures in Europe last week, over the last couple of weeks, that kind of got some short covering in wheat. Remember we talked about you're going to get these short covering rallies? But the problem is Russia has a big crop, 88, 90 million metric tons. They're about ready to harvest it. The US winter wheat crop harvest is going on. When you're harvesting, Paul, it's very, very hard to excite the market because weather can't be involved too much when you're harvesting. And so I really don't think wheat is going to be able to get off the, you know, the tarmac here until we get further along and we get enough of the harvest put away and you get that post-harvest rally, shall we say? That's not going to be at least until we get to the latter part of July.
I kind of alluded to this in the main program, but the next question, Matt in Ohio, circles back because I want to focus in here. Can we get a Chinese demand-led rally in the face of another national record yield for corn and beans?
I never believed that this agreement was for China to go run the market higher. I've always felt it was for the Chinese to time their purchases when it's most suitable for them. They're not stupid. I think they know what El Nino means for US production. I would expect them to look to be a large buyer in the month of August when there's the pressure and the speculators are hitting the market and our farmers are selling because they have to. I think they're going to bide their time and look for some really, really good... the basis are widening out. So, they're going to do it. They might limit how much downside there is, but I don't want to see them taking the market off the lows. I don't believe that's the game this time around. It was the game the last time around when Trump was president and they signed the first deal. That's not the game this time. They're the shock absorber, not the price maker to the upside.
Okay. Justin in Iowa, I asked your question in the main program talking about the weather in the market. So, I want to go to Phil in Ontario and that kind of ties in. There's Justin's question. I talked about yellow spots in eastern Iowa. And Phil's question is... I should have done it a couple minutes ago. Sorry, Shawn. French corn prices have risen significantly partly because of the heat dome there in Europe. Will it start to affect the corn futures here or do we need our own heat dome in the Midwest? Now, I know the first answer or the first part of the answer is it needs to keep going. But I want to talk about that French story when it relates to the wheat, but now also the corn market.
Look, Europe is going to have a recurring drought upper air flow pattern. We fully expect that we're going to see a regeneration of this extremely record hot dry temperatures to come back in mid-late July exactly when pollination's going to be kicking in. Is that enough to create a short covering rally in corn? I think it is. Is it enough to like create a permanent low in corn? I don't think it is. But I think there could be an opportunity in mid-late July on EU drought and corn pollination problems to catch a short covering rally that you can get those cash sales made, clear those bins, get those things off the books at at least a level that might be better than what we're seeing right now. But I don't think it's enough to counteract a big US crop unless the USDA reports next week are going to show 4 million less corn acres or something like that, which we don't anticipate.
I was just going to say, do you anticipate that?
