Drought Map Remains Colorful

What’s Happened…

The most recent drought monitor map suggests that the entire nation remains well below normal rainfall except for the central Midwest. Winter wheat conditions have plummeted to their worst in recent history, with the current crop now estimated to be the smallest since 1972. As summer approaches and temperatures rise, the question is whether or not drought conditions will migrate more toward the central Midwest. For reference, the U.S. Drought Monitor is produced through a collaboration among the National Drought Mitigation Center at the University of Nebraska-Lincoln, the United States Department of Agriculture, the National Oceanic and Atmospheric Administration, and the National Aeronautics and Space Administration. 

Why this is Important…

Record crops in both the Northern and Southern Hemispheres over the previous two years have supplied the world with ample wheat, corn, and soybean supplies. Low prices have led to increased demand. It may only take one year of short crops to change the view from ample world inventory to significantly tight inventory. Weather is the variable that will most likely have the greatest impact affecting crop production. The bottom line is it doesn’t take much of a vivid imagination to suggest that, if dry conditions persist and timely rains don’t occur, commodity prices could soar. 

Both corn and soybean supplies are larger than a year ago and yet prices in spring of 2026 are trading higher than in 2025. Speculative interest continues to be strong in owning commodities, as evident in the weekly CFTC Commitment of Traders report. Is the current build-up in long positions a bet by investors that another year of good weather conditions for crop production is not likely? Only time will tell. The law of averages might suggest a lower production year is lurking somewhere. 

What can you do about it?

The old saying is to be careful what you wish for. Grain producers have been wishing for a significant price rally. Frankly, they need it, considering the drawdown in revenue and increased expenses over the last several years. What should you do with the price rally? It gets tough to sell into a bullish market because each prior sale may be viewed as a mistake. Common sense and strategy need to prevail. Selling into a rally is critical in case prices falter or even fall apart. Yet selling too much too soon could be a big problem. 

Work toward a balanced approach to your marketing, which means making sales and using call options to cover for the adversity that less-than-ideal weather could bring. On unpriced crop, consider utilizing put options to establish a price floor. There’s too much at stake to not be an effective and smart strategic marketer. The current drought map is colorful and could be hinting that this year will be significantly different than any in recent memory. Embrace the volatility and use the correct tools to manage it.  

Find out what works for you… 

Work with a professional to find the strategy or strategies that are best suited for your operation. Communication is important. Ask critical questions and garner a full comprehension of consequences and potential rewards before executing. The idea is to make good decisions for the operation and less emotionally–charged responses to market moves, which are always dynamic.   

About the Author: With the wisdom of over 36 years at Total Farm Marketing and following across the Grain Belt, Bryan Doherty is deeply passionate about his clients, their success, and long-term, fruitful relationships. As a senior market advisor and vice president of Brokerage Solutions, Doherty lives and breathes farm marketing. He has an in-depth understanding of the markets and marketing tools, an excellent listener, and communicates with intent and clarity to ensure clients are comfortable with their decisions.

The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation. 

Author

Bryan Doherty