Understanding the Impact of Weather on Global Crop Markets

What Happened

Over the next 30–60 days, the weather patterns in South America will be crucial in determining price fluctuations for row crops. Additionally, the average prices of December corn and November soybean futures will establish the spring insurance price levels for the 2026 crop year, affecting coverage options for farmers.

Why This Is Important

In recent years, abundant global crop yields have kept grain prices generally low. The January World Agricultural Supply and Demand Estimates (WASDE) report signaled an increase in supply, prompting end users to adopt a just-in-time inventory approach. While current low prices provide an opportunity, this could change rapidly if adverse weather conditions impact crop yields in the Southern Hemisphere.

World demand has begun to pick up as a reaction to these low prices, highlighting the necessity for sustained large crop production. With recent reports influencing market prices, it is advisable for end users to buy with a long-term perspective, especially since current prices are near or below the production costs for row crop farmers. A significant drop in prices over the next three to six months appears unlikely.

Predicting crop production outcomes in both hemispheres remains challenging, with weather being the primary variable affecting supply and consequently, market prices. While row crop prices have generally been stable, other commodities like cattle and metals have experienced significant price increases. If market players sense a potential rise in grain prices, a swift turn from short to long positions could occur.

Crop insurance price levels are established in February, which is vital for farmers as they plan for the upcoming year. Understanding the insurance available against losses is important, yet effective marketing strategies are essential for a successful business.

What Can You Do?

Should weather concerns in the Southern Hemisphere cause a price rally in the next 30–60 days, it will be crucial to sell both old and new crops during this spike. However, market dynamics can be unpredictable. After making initial sales, prices may either decline or continue to rise. If they surge, early sellers may face regret while hesitating to sell more. Conversely, quick price drops can lead to anxiety about missed opportunities.

The key to navigating this market is to sell judiciously during rallies while ensuring readiness for further price increases. Creating a balanced marketing plan is essential, as price volatility is expected to increase. Preparing for different pricing scenarios is a critical component of effectively managing this volatility.

Find What Works for You

Collaborate with professionals to identify the marketing strategies that best fit your operation. Communication is vital; ask insightful questions to grasp the full spectrum of potential outcomes before making decisions. The objective is to foster sound decisions for your operation, rather than impulsive reactions to ever-changing market dynamics.

Editor’s Note: If you have any questions regarding this perspective, feel free to contact Bryan Doherty at Total Farm Marketing: (800) 334-9779.

Disclaimer: The information provided here is sourced from reliable entities; however, it cannot be guaranteed as complete. Individuals making decisions based on this information do so at their own risk. Trading in commodities carries a significant risk of loss and may not be suitable for everyone. Ensure to evaluate whether such trading aligns with your financial situation. These price movements or extreme market conditions are not indicative of normal trends.

About the Author: With over 30 years at Total Farm Marketing, Bryan Doherty is deeply committed to his clients’ success. As a senior market advisor and vice president of brokerage solutions, he has a profound understanding of farming marketing strategies and maintains consistent, transparent communication to ensure client satisfaction in their decisions.