Bored Markets, Cheap Options, Big Report Risk

New Year, New Outlook: Navigating the January 12th Yield Report

Welcome to the first edition of 2026. While the markets have been relatively boring lately, we are approaching a major catalyst: the January 12th USDA final yield report.

Because previous reporting cycles were disrupted by government shutdowns, this specific report is expected to finally fill in the missing "puzzle pieces" and may hold a surprise or two regarding the U.S. crop.

Corn Market: Watching the "Quiet" Strength

The corn market has been stuck in a narrow 16-cent range since November. However, the underlying structure is showing more constructive signs than we saw at this time last year:

• The March/May Spread: This spread has stayed inside a tiny 1.25-cent range since November. Last year, this spread was widening, which signaled that corn was flooding into commercial channels; this year, that isn't happening.
  

• The Negative 8 Threshold: As long as the spread holds at or above negative 8 cents, the market isn't showing a surplus in the channels, making a rally more likely than a sell-off.
  

• Basis Improvement: Over the last five trading days, basis has improved from 8.25 cents to 7.5 cents.
  

• Yield Expectations: Many farmers believe it was impossible for the yield to be as high as previously reported, especially with "tight tassel" issues and southern rust during the summer.

Options Strategy: Finding the Right Window

Volatility is currently very low, which makes options relatively affordable for those looking to protect their bins or re-own bushels they had to sell for year-end capital.

• February (Serial) Options: These expire in about 17 days. An at-the-money 4.44 call is currently 7 cents.
  

• March Options: These provide 45 days of coverage for 9.75 cents.
  

• The Strategy: For a difference of only 2.75 cents, you get nearly triple the time. Jon prefers the March options because the premium will hold its value better if the report ends up being quiet.

Outside Markets: Oil, Silver, and "Flighty" Commodities

• Crude Oil: The market remains inverted, meaning there is no "carry" (the market isn't paying you to store it). Jon notes that while prices look weak now, they almost always "creep back up" by the summer fishing season.
  

• The Silver Anomaly: Silver has made a massive, unusual move to $80/oz. While "silver bugs" are likely holding on, the high price is finally encouraging some physical silver to move out of the countryside.
  

• Geopolitical Resilience: Commodities are no longer as "flighty" as they were during the start of the Russia-Ukraine war; the markets now tend to shrug off Middle East news and port bombings much faster than before.

Cattle: Warning Signs on the Horizon

Cattle are approaching old highs again, but the fundamentals look different than the last bull run:

• An "Echo" Market: This rally appears driven by low numbers and futures speculators rather than strong consumer demand.
  

• Government Pressure: The government has explicitly stated they want beef prices lower before midterms. Plans to import more beef from Australia, Argentina, and Mexico could put a lid on this market.
  

• Hedging: Because the government has "told you exactly what their plan is," it is advisable to look at protection despite options being "outrageously expensive."

  
  

Jon’s 2026 Weather Prediction: "There will be a weather scare this year." While the market is currently "asleep" on drought talk, it remains very dry out west, and it is unlikely we will get perfect weather three years in a row.

Ready to build your 2026 plan? Don't get caught in a "short window" rally without a strategy. Give us a call to go over the numbers.

Jon Prischmann: 218-731-1578