In the Good Old Summertime

The end of May draws a final curtain on meteorological spring, with the dawn on the First of June bringing with it a new season – summer.

Yes, the time for cookouts and swimming pools, family road trips and fireworks are upon us. But most of all, the summer season is hot, and back in Kansas where I grew up the heat was mixed with a constant blast of furnace-like wind and no rain.

I have to laugh each year as many Grain market commentators get excited about forecasts of hot, dry weather during the months of June, July and August. It’s almost as if they are chickens, incapable of remembering not only from one year to the next, but often from day to day. (One of the reasons I often refer to this group as Chicken Littles.)

But speaking of markets, and the turning of the calendar page, what tends to happen to Grains over the course of the summer? Let’s take a look at normal seasonal tendencies based on the various National Cash Indexes (national average cash prices, intrinsic value of the markets). 

Corn Prices Tend to Slip Early

As usual, let’s start with King Corn. By the time we get to the end of the summer season there will be some newly harvested bushels rebuilding supplies in relation to demand.

A look at the seasonal study for the National Corn Index shows the average seasonal high weekly close tends to be posted between the second week of May (5-year index, red line) and the second week of June (10-year index, blue line). If we look at the summer season only — from the last weekly close of May through the final weekly close of August – we see solid selloffs by the cash market, regardless of time frame.

The 5-year index shows an average drop in price of 14% while the 10-year index shows an average decrease of 13%. Keep in mind these are averages, meaning changes can be smaller (or larger) than what is normally seen. This time around the calendar, I’m leaning toward a larger than average break.

By tracking the November 2025 soybean/December 2025 corn futures spread from last September through this past February, we know corn bought acres away from soybeans this spring. Then, tracking the September-December corn futures spread we could see the increased acres were being planted quickly.

Soybeans Follow a Similar Pattern

Similar to corn, the seasonal studies for the National Soybean Index show a solid selloff during the summer months. From the same last weekly close of May through the final weekly close of August, the Index tends to lose 10% (both 5-year and 10-year averages).

The fun thing about the National Soybean Index is it was priced near the big round number $10 through much of April and May, again based on weekly closes only. This makes the math easy when it comes to projecting a low weekly close of nearly $9 in late August. What if that happens? Based on the economic Law of Supply and Demand, what does the market price at this level tell us about real fundamentals?

If the Index finishes August (also the end of the 2024-2025 marketing year) priced near $9.00, then it would put available stocks-to-use near 19%. This would be the largest end of marketing year available stocks-to-use figure since 2019-2020 when the Index was priced at $9.01. However, given U.S. soybeans lost planted area to corn for 2025, the stage would be set for a rally once combines started to run at harvest. How far will likely be determined by winter weather in South America to that point.

Wheat Supplies Keep Pressure on Prices

By the time you read this, it is highly likely the 2025 winter wheat harvest will already be rolling across the U.S. Southern Plains hard red winter (HRW) growing area. The airwaves will be filled with the same two questions as always: What will national average yield and total production be? I have the same answer for both: IT DOESN’T MATTER.

I’ll give those whose very existence hinges on the U.S. Department of Agriculture’s imaginary numbers a moment to collect themselves. The reality is it doesn’t matter what U.S. HRW wheat production looks like this year. Why? Because: 1) The U.S. has ample supplies heading into harvest; 2) Demand remains more theoretical than actual; and 3) Did I mention we have plenty of wheat on hand to meet demand?

Grain Bears May Have the Edge

In April, HRW futures spreads were so bearish — covering 90% to 100% of full commercial carry — that the CME’s Variable Storage Rate program raised the official storage rate beginning May 19. That kind of move doesn’t happen when supplies are tight. As for the National HRW Wheat Index, seasonal patterns suggest more downside ahead, with the 5-year index showing an average drop of 21%, and the 10-year index falling 17%.

The bottom line: there’s not much to look forward to “In the Good Old Summertime” — at least when it comes to grain markets.

Still, it might help to remember a line from the 1902 song of the same name: When your day’s work is over then you are in clover, and life is one beautiful rhyme. No trouble annoying, each one is enjoying, the good old summertime.