• Based on trend - price direction over time - the corn market turned bearish at the end of May 2022. 

• The past 3 years have seen long-term investment money turn bearish corn as well, based on the market's real supply and demand situation. 

• Looking ahead, corn's real fundamentals don't turn bullish any time soon. 

Yes, I know today is another monthly USDA World Agriculture Supply and Demand Estimates (WASDE) day, but I’m not going to talk about it here. What’s the point? The US ag industry in general knows what I would say, what I’ve said for more than 30 years now, and for the most part it doesn’t care. It wants to see how USDA’s latest estimates match up with pre-report guesses made by folks who, in many cases, have never seen a kernel of wheat or soybean pod, and all they know of about an ear of corn is what they find at their nearby chain grocery store. Real supply and demand, available to all of us every hour of every day doesn’t matter. Market economics, the Law of Supply and Demand, are irrelevant, even to those who call themselves economists. The industry has to have a way of keeping score, regardless of if “everything is made up and the points don’t matter”^[i]. As I’ve said before, though, I don’t mind. The folks who want to know what is really going on can find what I have written, continue to write. By doing so they, we, have an advantage over the rest of the crowd. Which is always nice. 

What else should we talk about today if not WASDE? There is a lot going on in the world of long-term investments. Let’s take a look at one my main market of interest: 

Corn: You’ll recall my go-to market for a long-term investment is corn based on Peter Lynch’s advice, “invest in what you know”, or something along that line. It best fits with at least three of my Market Rules:

• Rule #1: Don’t get crossways with the trend. The different aspects of the corn market (cash, futures, ETFs, etc.) tend to follow trends relatively well. What I mean by “trends” is simply price direction over time. Additionally, when we apply Newton’s First Law of Motion to the market we come up with: A trending market will stay in that trend until acted upon by an outside force, with that outside force usually noncommercial (investment) activity. A look at the most recent Commitments of Traders report (legacy, futures only) and we see Watson (algorithm driven investment industry) has continued to add to its net-short futures position in corn.
• Rule #2: Let the market dictate your actions. Here’s where fundamentals come into play. Since establishing short positions based on a change in trend at the end of May 2022, we’ve see the supply and demand situation for US corn change dramatically. At the end of April 2022 the National Corn Index (($CNCI) (national average cash price) was priced at $8.00 putting available stocks-to-use (as/u) at 7.1% before the Index dropped to $7.51 at the end of May 2022 with as/u of 7.6%. At the end of June 2025, three years down the road, the Index was priced at $3.95 putting as/u at 13.1% with the previous 10-year average end of June figure at 12.4%. Applying the economic Law of Supply and Demand that tells us the market price (equilibrium) is where the supply and demand curves intersect. Therefore, the lower the market price, the more supply there is in relation to demand, in line with my use of available stocks-to-use.
• Rule #6: Fundamentals win in the end. When will Watson change its activity, first covering some its net-short futures position and possible move toward a net-long futures position? When the corn market’s real fundamentals change. When will that be? All I know is it won’t be today. If we look at the trend of the 2025-2026 futures spreads and forward curve we see the individual spreads continuing to cover a larger percent of calculated full commercial carry. For example, the Dec25-March26 spread covered 42% at the end of March, 45% at the end of April, 49% at the end of May, 49% again at the end of June, and 56% at this past Thursday’s close. The Dec25-July26 forward curve shows us something similar, growing from 34% heading into planting season this past spring to 49% this past Thursday. 

From a real fundamental point of view, there is no reason for Watson to get bullish corn. Does that mean the market will never go up? Never is a long time, and as I’ve said before, fundamentals will change eventually. We will see these changes in the our key reads on real supply and demand: The National Corn Index, national average basis, futures spreads, and the market’s forward curve. 

^[i] The well-known catchphrase from the television show “Whose Line Is It Anyway”.