I got an old familiar query last week. Phil, will December corn clear $5 a bushel? Of course, my answer was like every other time, I don't know. As I write this, December corn is $5.40 a bushel and cash prices for delivery in Ontario are approaching $7. Lots of market orders have hit this summer, and as per usual, when you have a market order hit, you always hope the price goes even higher. That's exactly what has happened over the last several weeks.

Of course, the question is what happens next. A few weeks ago, I wrote a column called "The Bears Are Coming, But They Haven't Arrived Yet". It was my attempt to tell everybody that big crops are on their way, but prices continue to go up. I don't pretend to know what is going to happen because prices are much higher than when I wrote that piece. The question is what happens next and why is it happening this way.

In many ways I still feel the same, but there's no question that the market is right. You might remember over the last couple of years I've written columns this time of year entitled "Big Supply is Winning." For instance, in 2024 and 2025 we had almost record or record crops coming out of the United States. Prices were a lot lower than they are today, while we are expecting the second-largest corn crop in U.S. history and the biggest soybean crop ever. There is a chaotic nature to this volatility within this rally that is hard to explain. In many ways, I have never seen it before.

I would say it is a combination of shrinking fundamentals and surprising geopolitical factors weighing on our grain trading algorithms. For instance, earlier we could never have surmised that the western European corn crop would be devastated by drought while at the same time the Russians and Ukrainians are attacking each other's grain export infrastructure. This created an even bigger unforeseen bottleneck for supply. In fact, over the last several months I have written that the grain algorithms have the Russia and Ukraine war dialed in. Clearly, they probably had it dialed in for a while, but over the last several weeks, as supply was seemingly getting lower, it's had a bigger effect on grain algorithm price discovery.

Big supplies should still be winning, with a corn crop predicted to come in at 16.013 billion bushels this year. However, as we've seen, headline speculation is saying that the crop is less than that. A year ago, we had 17.021 billion bushels at much lower prices. Needless to say, the stocks-to-use ratio continues to decline, currently at 10.1% with carryout at 1.945 billion bushels. However, the market is telling us that big supply is not winning anymore; in fact, it's shrinking. I'm not in a position to say whether that's true or not, but that's what the USDA is saying, and that's what the algorithms are believing.

Soybeans, on the other hand, are the great liars. For instance, we are looking at a record U.S. crop this year of 4.519 billion bushels. Soybean futures broke through $13 last week and most certainly will continue to be volatile. Needless to say, the big harvest is coming, and you'd think you'd find some harvest pressure somewhere. Needless to say, the geopolitics aren't settling down, which may lead to prices we could never have imagined. Having said that, corn prices have rallied $1.40 a bushel in less than two months. That's something that almost nobody predicted, and I'm not about to start now.

One of the great truths of the grain market has to do with real grain fundamentals. What I mean by that is what initial yields are when combines start to roll through the fields. There is some of that going on right now in the United States, but it's still a little bit too early to tell. However, if these combines start to roll and yields are not up to expectations, that will form another round of bullish expectation.

We also have President Xi visiting the White House on Sept. 24. You have to believe there might be something coming out of that for agriculture. As of today, there have been 304.6 million bushels of known sales to China, a third of the way to what the White House goal was last May. Today, the Nov 2026 soybean contract dropped as much as 20.0 cents before rallying 28.75 cents off its session low and closing 6.0 cents higher for the day. One day after posting a bearish reversal, the same contract completed a bullish reversal. So, you tell me what is going to happen next.

In Ontario and Quebec, these higher futures prices have accelerated cash values by a Canadian dollar fluttering in the 72-cent U.S. dollar level. That has been a very good combination for grain producers who have been making sales along the way. What happens next? I don't know if December corn will clear $5.40, or whether today's prices will look like a missed opportunity a few weeks from now. What I do know is that the market has sent us an invitation. Until the market proves otherwise, I'm going to pay attention and keep some old-fashioned humility. After all, in the grain market, the only thing we really can be sure of is that we can't be sure of anything at all.

Philip Shaw can be reached at philip@philipshaw.ca

Follow him on social platform X @Agridome

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