Katie Geerdes

Recco Day 1: Buy back 10% of short December 2026 corn futures hedges (for modest 5 cent gain). Buy back 40% of short December 490 corn calls (for modest 2 cent gain). This leaves short futures and long December 450 puts in place to hedge downside against 90% of 2026 corn sales while reopening upside exposure for 50% of the position. The goal is to keep downside protection a bit longer through the growing season while opening longer term upside post-harvest.    ***************************   There are probably a lot of lessons that can be learned in the last week from the market. The first one that comes to mind is, "It is always bullish at the top." Hopefully customers took our advice, selling on the way up. It would have been nice to get closer to the high, but we sold at profitable prices, choosing our targets rather than having it being chosen for us. Had it not been for the Black Swan event in the form of the Iran War, it seems reasonable to assume we never would have seen $5 corn. The seasonal high appears to be in.   Giving up 30 cents in a week should not…

A significant shift was marked in the expectations for U.S. monetary policy. Futures markets moved to assign a higher probability for the central bank raising interest rates this year over keeping the federal funds rate unchanged at 3.75 percent. The updated interest rate outlook was a reversal from the start of the year when traders were pricing in at least two quarter-point rate cuts, with some positioned for as much as a full point of easing. FOMC rate hike odds and bond market yields jumped further on Friday following the monthly jobs report.   Payroll counts were stronger than expected, just as numbers were in the leading employment reports earlier in the week. The Jobs Openings and Labor Turnover Survey (JOLTS) for April measured job openings climbing from 6.9 to 7.6 million, the highest in nearly two years. Layoffs were down, but fewer people quit their jobs, which signaled diminishing confidence in being able to find something different. Similarly, even though job openings were up, actual hirings were down, suggesting employers were stretching out the hiring process and becoming more selective due to uneasiness about the economy. Another private payrolls report for May beat expectations as it recorded growth in…

In my view the conflict with Iran is worsening rather than improving. Some believe that President Trump has gotten caught in what they call an "escalation trap". "The escalation trap is a cycle where limited military actions fail to achieve their intended political goals, causing leaders to continuously escalate the conflict in an attempt to bridge the gap between military action and strategic outcomes. This cycle often leads to a widening, uncontrollable war." I think that the president's constant vacillation between additional military action and negotiation is because he is searching desperately for an exit from the trap without admitting he is caught in it. Israel does not want to end the war with Iran still functional enough to continue to be a threat. The US blockade will strain the Iranian economy but they will deem the political benefit, more strain on the global supply chain that will make everyone else hate us more, worth it. Even if some kind of superficial agreement is reached, it will not end the larger conflict. The Mid-East is the epitome of a "forever war" if there ever was one.   I also do not like being misled as to the state of affairs.…

The corn market has once again given back all its war premium and then some, falling below the $4.70 region.  The back and forth between the on again - off again conflict between the US and Iran continues.  One interesting consequence with war is it tends to invent new technologies (think GPS, early-stage computers).  This war has created a new word.  That word being "quasi-ceasefire" - used to refer to the pending conflict between the US and Iran.  It appears to be an oxymoron such as "quasi-diet".  In this scenario, I believe it means either side promises not to fire on the other….unless they get a clear shot.   While traders appear to want to believe that the Strait of Hormuz will reopen soon, the current standoff is less encouraging.  Online bets place the chance at opening the Strait of Hormuz by September 1st and 50%.   The market is growing tired of the back-and-forth stalemate.  Crude oil and corn are trading in opposite directions to the start the week.  Bulls will want to keep attention on the quasi-ceasefire but may find it difficult.  The weather outlook is positive, and as such will increasingly apply pressure to the market.  The dry…

Part 2 of 2 One of the most notable differences between this Ag recession and the 1980s farm depression is that this time politicians do appear to be more open to farm aid than before. Back then, we had to have tractor-cade protests and farm-aid concerts to draw attention to the disaster. Back then, farm banks failed in large enough numbers to worry the Fed. There is no issue this time with farm bank solvency. This time Trump exchanges political support from farmers for ACHs, above and beyond farm bill safety net provisions, on a regular basis. It is entirely political, but the ACH deposits spend the same. These payments do not make farm finances whole but they reduce the sting of his trade war policy.  The farm bill safety net is being improved and hopefully will not be deeply drawn upon. It is likely they will pass a new farm bill before the mid-term election. Farmers never got this much attention in the 1980s until the farm banking sector was overwhelmed. The Farm Credit System went belly up but this time they are solvent enough to continue paying dividends to their borrower/customers. They used the farm aid back then…

Part 1 of 2 While crop production margins have been negative and subsequently the number of farm bankruptcies has climbed, there is just no where near the degree of financial crisis occurring that defined what the Ag sector went through in the 1980s.  Nationally, farm bankruptcies were 44% higher last year than in 2024, but the increase is inflated in terms of percentage from a relative low level. The farm media talks up the current financial squeeze intending to elicit sympathy from readers and the public but what it shows is the lack of appreciation for what a real farm sector economic disaster looks like. In many ways, the Ag Depression of the 1980s was the defining period of my life.   Interest rates have climbed from historical lows but are a third of what they were at their peak in the `1980s crisis. Commodity prices reflect the value of the dollar. Currently, the dollar index hits a wall near par (100). Comparatively, during the U.S. farm crisis of the 1980s, the U.S. Dollar Index (DXY) surged dramatically, peaking at 164.72 in February 1985. This represented an appreciation of roughly 80% to 95% from its mid-1980 trough, devastating American agriculture by…

This short holiday week started off like most weeks have over the last three months, with markets taking direction from crude oil. Grain futures gapped lower on Monday night after crude oil was already down sharply in response to news of a peace deal with Iran. Futures settled off their lows on Tuesday, but crude oil kept falling after that to exert pressure on the broader commodity space. The exception was soybean oil, which decoupled from crude and went on a three-day run to new highs. Soybean oil was standing out for having earlier benefitted from strength in crude oil and for now having the potential to rally further because crude oil is weakening. Lower crude oil futures, assuming they weigh on diesel fuel prices, would pinch biofuel production margins and drive up the costs of compliance with the elevated renewable volume obligations recently announced. As primary feedstock for biomass-based diesel fuel, soybean oil futures were rising in step with the D4 RIN credits that cover advanced biofuels. Soybean oil and D4 RINs rising together reflected increasing attention on shrinking RIN carryover banks and the question of whether enough gallons of biofuels can be physically produced to avoid future compliance…

Dr Elwynn Taylor, now retired, predicted a major US drought akin to 1936 based upon an 89-year drought cycle and tree ring studies targeting 2025 in his seminars for a number of years prior to that date. Both NW IA and the US produced record yields in 2025 so Taylor was obviously wrong…right? I had pointed out that just a small deviation in an 89-year cycle would provide a window of a few years. I had asked Taylor where he expected the drought to be centered and he said Oklahoma like the last cycle. If you talked to wheat farmers in Oklahoma and Kansas right now, after they just lost their winter wheat crop, they would give a different interpretation of the severity of their being drought than farmers in Iowa would. The US as whole is in a drought as extensive and severe as in the 1930s. Wildfires are surging and the dust blowing is being tracked by satellite. Were we still using the tillage practices such as moldboard plowing like decades ago, another dust bowl would be assured under current conditions. A farmer told me last week that he did not roll his soybeans as he feared creating…

Morning Market Talk Below, you will find today's installment of Morning Market Talk. You can copy and paste the link below for this morning's episode.   https://youtu.be/_clSNdHX43s?si=VGmNl7C6BYGROWyk   On the Grains   Soybeans led a round of buying in the grain and soy markets overnight. Soybeans have outperformed corn and wheat recently as traders wait to see if China emerges as a buyer of U.S. cargoes following the recent trade deal. While there's no news on that front, optimism of Chinese purchases is supporting soybean futures. The overnight strength in corn and SRW wheat is nothing more than modest corrective buying tied to the strength in soybeans. Wheat in particular faces an uphill battle as harvest activity will pick up.   Crude oil futures bounced overnight after the U.S. struck Iranian military targets for the second time this week. U.S. officials say the strikes have been defensive in nature and the ceasefire remains intact, but traders have stopped removing war premium for now.   Markets are headline driven and money flow remains the most important factor in daily trading moves, fueled by the geopolitical and trade fronts.     On the Cattle:   Cattle futures shot higher on Wednesday amid…

Be careful what you wish for.  The first part of May was unusually cool, delaying crop development and germination.  Warmer temperatures were needed.  Heat is finally catching up to the season as temperatures will be above average in as much as 80% of the Corn Belt this week.  The warmest temperatures seem centered in the Dakotas, where they will see 95 degrees.  As we look out ahead through the month of June, extreme temperatures pull back a bit, but they remain elevated by 5 degrees or more above their averages in much of the Western and Northern regions.  The Eastern Corn Belt meanwhile hovers closer to its historical temperatures.   The near-term forecast has quickly shifted drier.  How long that lasts will determine if it is a good thing or a bag thing.  I am of the belief that it is a good thing for the time being, for a couple of reasons.  First off, after receiving over 3 inches of rain on one of our farms last week, there was some light ponding, and so drier weather is needed.  What is amusing (at least to me) is that our farms fell into the US drought monitor's "abnormally dry" region. …