The global agricultural commodities sector is locked in a severe ag market downturn, forcing producers to navigate a wave of grain price declines. Farm Director KC Sheperd sat down with OSU Extension Crop Marketing Specialist Todd Hubbs to dissect the technical realities of this market slump, analyze the impact of timely rain across the Corn Belt, and explore what local producers can expect as harvest progress collides with multi-month price lows.
Technical Realities: A “Blood Bath” on the Boards
When asked about the current performance of grains on the trading boards, Hubbs did not sugarcoat the situation.
“I think the technical term is a blood bath, KC,” Hubbs stated bluntly. “It’s been brutal. We’ve seen just, particularly in our wheat markets and in HRW [Hard Red Winter] in particular… just down day after day after day. We’re back down to levels we saw in early March.”
This downward momentum is not limited to wheat; it is a sweeping trend across the agricultural sector. Hubbs noted that commodities have collectively disconnected from the supportive influences of the oil market and ongoing geopolitical tensions. Instead, the focus has shifted heavily toward weather patterns and production forecasts.
“There’s been timely weather that I think has come into the market,” Hubbs explained. “There are rumors and discussions about the wheat crop, while still poor, being slightly better than the initial May forecast for winter wheat. And, you know, in wheat, the Northern Hemisphere crops, other than us, have been pretty good.”
Despite previous concerns about potential crop issues in Russia, Ukraine, and the European Union, actual output is proving more resilient than expected. While these regions may not reach last year’s production levels, the situation is far less dire than the market initially anticipated, compounding pressure on domestic prices.
Searching for a Bottom Amid Falling Prices
To spark a renewed upward trend for Hard Red Winter wheat, the market would typically require a major global supply disruption or a significant weather shift in the Southern Hemisphere. However, Hubbs believes the immediate catalyst might need to come from outside the wheat complex itself.
“At this point, I feel like it’s from outside the wheat market a little bit, maybe corn and soybeans,” Hubbs said. “Wheat’s down. I thought we might have hit a bottom, but the bottom fell out of soybeans and corn a bit today, so I think it’s getting dragged down.”
Domestic weather is also playing a dual role. While beneficial for long-term crop health, regular rainfall across the Corn Belt is actively dampening price dynamics.
“We probably need to see some domestic crop problems,” Hubbs noted. “And while there has been some dryness creeping into the Corn Belt, the worst parts of the Corn Belt—in the western half, in Nebraska, eastern South Dakota, and parts of Iowa—are expected to get rain this week. So we keep getting these little timely rains… it’s causing problems for our prices dynamics.”
Looking forward to the upcoming USDA Crop Production report, Hubbs expects minimal changes for Oklahoma’s numbers, noting that the local crop’s poor condition is already factored in.
“I don’t expect the winter wheat crop here in Oklahoma to go up too much when we get the crop production report in June next Thursday, but it’s not probably going to go down all that much either,” Hubbs said. “So we’re sort of baked in there.”
Regional Variations and Basis Stability
The impact of this year’s weather is highly localized, creating a stark contrast between different regions of Oklahoma.
“I know there’s been reports of pretty good crops… how spotty the Oklahoma crop is, particularly North Central and Eastern parts,” Hubbs observed. “There’s going to be some good fields out there. So when you hear reports coming in, ‘Oh, this someone did 60 or 70 bushels an acre,’ that’s not surprising. But Western Oklahoma got brutalized this year.”
Despite the low production totals—with Oklahoma’s yield projected at 28 bushels per acre and minimal changes expected in harvested acres—local basis levels have held steady.
“I’m not expecting basis to start weakening on us right now because the crop isn’t good,” Hubbs reassured. “Now, we have seen export sales for the next marketing year be a little bit weaker, but in HRW, they ticked up this week… We’re still falling behind, but you should expect that given our crop’s the lowest in HRW since the ’50s. So, I don’t expect it to weaken very much, KC, at all.”
Global Demands: China’s Buying Habits and the Soy Complex
The conversation also touched on international trade, specifically regarding reports that China has begun placing orders for U.S. soybeans. Hubbs expressed his characteristic caution when dealing with Chinese demand metrics.
“The market’s probably already baked in that 25 million metric tons they said they were going to do,” Hubbs stated. “As you know, I’m a ‘believe it when I see it’ person when it comes to China, and any number of things can happen between now and when they actually buy soybeans.”
However, he acknowledged that China’s tendency to act as a bargain shopper during sharp price drops makes recent purchases highly plausible. This demand must balance against a massive South American supply.
“You have to remember, though, the Brazilian crop was a monster,” Hubbs emphasized. “These 180 [million metric tons]… looks like they came to pass, and they’ve been moving beans at a pretty high rate. So, it’s not like we’re short of beans.”
Domestically, the strength of the soybean market continues to be propelled by crushing operations tied to renewable volume obligations, biofuels, and a robust soybean meal export market. Increased Chinese buying could provide the necessary momentum to lift soybeans and support the broader agricultural complex.
The Value of Patience in a Depressed Market
As producers navigate the upcoming weeks, Hubbs will be monitoring international production numbers, EIA data on gas and ethanol demand, and weekly export reports. He admitted that the current multi-month lows are discouraging, especially for those who missed earlier selling windows.
“This weakness is sort of depressing, and I get that for everybody,” Hubbs concluded. “When we had that huge run-up after the May crop production report, if you missed that sales opportunity—which I could understand not doing it if you were concerned about how many bushels you actually had—it might be difficult to get back to those levels in HRW… because the geopolitical issues have sort of come out of our markets.”
With cash prices in Oklahoma slipping well below the $6.00 mark, Hubbs advises against selling into the current panic.
“It’s very hard to sell when prices are running down like that, and I wouldn’t recommend it honestly,” Hubbs said. “I feel like we got to hit a bottom and turn around at some point… I think maybe a little patience if you can do it and see if we can turn this thing around.”
