Sell It or Store It? Smart Strategies for a Stuck Market

When Carry, Basis, and Options All Point to Defense Grain markets haven’t gone anywhere—but that doesn’t mean nothing’s happening.Corn’s been quietly gaining on wheat, soybeans can’t seem to rally even with low acreage, and now we’ve “found” another 200 million bushels of corn. Add in a government shutdown, missing export data, and full carry across the board, and you’ve got a market begging for strategy—not hope.

This week on Hedge Heads, Jon Prischmann and Ryan Tungseth unpack why playing defense is the smartest move this fall and how to structure that defense with cheap options, spreads, and smart storage choices.

Market Breakdown: Why the Market’s Stuck

Corn vs. Wheat: The Spread Says It All Corn’s been gaining on wheat—a rare sign that either corn is too expensive or wheat is too cheap. Historically, Kansas wheat trades at a premium to Chicago wheat, but not this year. When Kansas slips under Chicago, it’s a signal that feed buyers may start pulling more wheat into rations—and that corn could lose some ground domestically.

Soybeans: The “Should Be” Rally That Isn’t With only 81 million acres planted, soybeans should have room to move higher. But they’re not. Heavy carry, weak basis, and sluggish demand are keeping a lid on the market. If we can’t rally with this few acres, the long-term picture looks tough. Still, this is a year where taking a chance on storage—or re-owning with calls—might make more sense than usual.

Corn: Too Much of a Good Thing Between the discovered bushels and full commercial channels, corn’s set up for a defensive season. Full carry, soft basis, and cheap volatility mean rallies will likely be sold. But that also opens opportunity: when implied volatility gets this low, calls and straddles become inexpensive tools for managing risk or positioning for an eventual breakout.

Actionable Strategies: How to Play Defense

1. Compare Storage to Calls: If you’re paying 5 cents a month to store, a March corn call may actually cost less—and carry less downside risk.

2. Use Straddles When Volatility’s Cheap: Implied volatility in grains is at historic lows—meaning both puts and calls are discounted. Straddles give you exposure either way if the market finally wakes up.

3. Watch Basis Like a Hawk: Futures might lie, but basis doesn’t. If basis starts tightening, it’s usually the first sign that something bigger is shifting.

4. Stay Nimble: This isn’t the year to sit tight and hope. Set clear sell targets, re-own where it fits your plan, and stay defensive until carry and spreads start to move.
   

Cattle & The Bigger Picture

The cattle market’s still roaring—but fundamentals are getting stretched. Feeders are driving the rally even as boxed beef and cash soften. The math doesn’t add up forever. Add in talk of new imports and it’s a market worth hedging sooner rather than later.

Meanwhile, in the broader economy, markets keep climbing, rates are steady, and inflation isn’t dead—it’s just disguised. When the reset comes, it’s likely to hit hard.

American Federal Financial Minute

Brought to you by our friends at American Federal Bank, this week’s Financial Minute looks beyond the farm gate. With interest rates stabilizing and the stock market climbing, many households are feeling confident—but cracks are showing. Mortgage rates have steadied, yet inflation still lingers in everyday costs.

Jon and Ryan talk about what these trends mean for ag lending and personal finance alike: how rate cuts could affect borrowing, why gold’s rise signals caution, and what to watch as the economy balances between optimism and reality.

American Federal Bank understands the unique needs of ag producers and rural businesses—and they’re here to help you plan ahead, no matter which way the market turns.

Final Thoughts: Defense Is Still a Strategy

When markets stall, it’s tempting to wait them out. But full bins, wide carry, and weak demand reward planning—not patience. Cheap options and smart timing can do more for your bottom line than wishful thinking.

Now’s the time to look at your plan: what’s stored, what’s sold, and what’s covered. Build flexibility in, stay alert for basis changes, and be ready when volatility finally returns.