2026 has been an extraordinarily volatile year in the commodity markets. Primarily, this has been an energy driven market fueled by the escalating war in Ukraine and the U.S. intervention in Iran, but there has also been no shortage of weather crisis which has impacted global grain production and those too have spilled over into higher cash prices for Ontario farmers.
The problem with a market that rallies as far and as fast as grain prices have over this past spring and summer is that the speed of price change sated to distort our perception of how far prices might actually go.
There is a commonly-quoted belief in the grain marketing trade that, “professionals deal in probabilities and amateurs deal in possibilities.”
The reality of 2026, is that with all of the geo-political drama around the globe and a related credit crisis developing in the bond market, nearly any price is possible. The real task however for grain growers who are building our a risk management plan for their businesses based on crop budgets and cash flow requirements is to narrow their sights on the top end of the probable price range and either avoid the temptation of getting caught up in dreaming about even better prices, or simply save the last 5 % or 10 % of the crop for those possibilities should they actually come true.
The reality is that at the end of the day, grains and oilseed prices are still established based on the fundamentals of how much supply there might actually be of a crop and how much demand actually exists to consume it.
Over the course of this past summer and fall we have seen funds build record long or near record long positions in wheat, soybeans, and soymeal futures (which has been very useful to growers who chose to lock in prices for future delivery periods). But ultimately the index funds, and trading algorithm platforms don’t actually take delivery of grain and consume it, so, particularly in the case of wheat, we’ve seen basis twist itself into some unusually low levels in order to achieve flat cash values where wheat will move to end users.
The first few weeks of Russia’s initial invasion of Ukraine back in February 2022, provides us with a reasonable example of what we might expect in grain prices as the market moves through another wave of intense military conflict. Between February and May of 2022, wheat values rallied to levels over $10 per bushel for a very short period, and then slid back down into a trading range where the buyers and sellers of wheat could both carry on reasonable business.
Geo-political price spikes are not a sustainable price trajectory, nor are they “ a new normal”. It is true that corn and wheat prices have never gone back down to the levels where they were before Russia invaded Ukraine, but that has everything to do with core inflation and very little to do with global food supplies.
Farmers are right to expect more out of grain prices going forward. Values that we would have called “good” a couple of years ago are not “good” anymore because inflation is a real thing. Today the annual rate of inflation is roughly 3 % and for the sake of easy math, let’s say that Chicago soybean futures are at $10/bu. A 3 % inflationary price increase moves those $10 soybean futures up to $10.30 (and the year afterwards up to $10.61).
Of course, the fact of the matter is that Chicago soybean futures are a lot higher than the easy math example of $10 and Ontario farmers are selling in Canadian dollars, but still operating in an economy with 3 % inflation, so, if your setting probable targets for 2027 or 2028 crop sales, build in at least 3 % annual price increases in your goals because costs are going to rise by at least that much.
Establishing price goals within the “probably” range is key to a successful marketing plan. The supply and demand balance sheet for corn, soybeans, and wheat are at the fundamental core of establishing price, and while the harvest of 2026 is not yet wrapped up, we are close enough to it to have an accurate estimate of total grain supply. Demand is less flexible than supply in the grain industry. Feed mills, flour mills and crush plants run whether it rained in the growing season or not, so the demand side of the grain and oilseeds market is largely already set with the exception of export sales potential.
The probability of grain prices being higher next spring, than the values for 2027 that can be locked in right now, are not very high.
It’s not impossible that a newly developing headline could push prices to record highs, but extending this summer’s rally is unlikely to occur. If the fund money begins to unwind its massive long positions, that’s a signal that prices probably won’t push much higher.
Steve Kell is a Simcoe County crop farmer and handles grain merchandizing for Kell Grain, with elevators in Belleville and Gilford.
STEVE KELL: Farmers right to expect more out of grain prices
2026 has been an extraordinarily volatile year in the commodity markets. Primarily, this has been an energy driven market fueled by the escalating war in Ukraine and the U.S. intervention in Iran, but there has also been no shortage of weather crisis which has impacted global grain production and those too have spilled over into higher cash prices for Ontario farmers.
The problem with a market that rallies as far and as fast as grain prices have over this past spring and summer is that the speed of price change sated to distort our perception of how far prices might actually go.
There is a commonly-quoted belief in the grain marketing trade that, “professionals deal in probabilities and amateurs deal in possibilities.”
The reality of 2026, is that with all of the geo-political drama around the globe and a related credit crisis developing in the bond market, nearly any price is possible. The real task however for grain growers who are building our a risk management plan for their businesses based on crop budgets and cash flow requirements is to narrow their sights on the top end of the probable price range and either avoid the temptation of getting caught up in dreaming about even better prices, or simply save the last 5 % or 10 % of the crop for those possibilities should they actually come true.
The reality is that at the end of the day, grains and oilseed prices are still established based on the fundamentals of how much supply there might actually be of a crop and how much demand actually exists to consume it.
Over the course of this past summer and fall we have seen funds build record long or near record long positions in wheat, soybeans, and soymeal futures (which has been very useful to growers who chose to lock in prices for future delivery periods). But ultimately the index funds, and trading algorithm platforms don’t actually take delivery of grain and consume it, so, particularly in the case of wheat, we’ve seen basis twist itself into some unusually low levels in order to achieve flat cash values where wheat will move to end users.
The first few weeks of Russia’s initial invasion of Ukraine back in February 2022, provides us with a reasonable example of what we might expect in grain prices as the market moves through another wave of intense military conflict. Between February and May of 2022, wheat values rallied to levels over $10 per bushel for a very short period, and then slid back down into a trading range where the buyers and sellers of wheat could both carry on reasonable business.
Geo-political price spikes are not a sustainable price trajectory, nor are they “ a new normal”. It is true that corn and wheat prices have never gone back down to the levels where they were before Russia invaded Ukraine, but that has everything to do with core inflation and very little to do with global food supplies.
Farmers are right to expect more out of grain prices going forward. Values that we would have called “good” a couple of years ago are not “good” anymore because inflation is a real thing. Today the annual rate of inflation is roughly 3 % and for the sake of easy math, let’s say that Chicago soybean futures are at $10/bu. A 3 % inflationary price increase moves those $10 soybean futures up to $10.30 (and the year afterwards up to $10.61).
Of course, the fact of the matter is that Chicago soybean futures are a lot higher than the easy math example of $10 and Ontario farmers are selling in Canadian dollars, but still operating in an economy with 3 % inflation, so, if your setting probable targets for 2027 or 2028 crop sales, build in at least 3 % annual price increases in your goals because costs are going to rise by at least that much.
Establishing price goals within the “probably” range is key to a successful marketing plan. The supply and demand balance sheet for corn, soybeans, and wheat are at the fundamental core of establishing price, and while the harvest of 2026 is not yet wrapped up, we are close enough to it to have an accurate estimate of total grain supply. Demand is less flexible than supply in the grain industry. Feed mills, flour mills and crush plants run whether it rained in the growing season or not, so the demand side of the grain and oilseeds market is largely already set with the exception of export sales potential.
The probability of grain prices being higher next spring, than the values for 2027 that can be locked in right now, are not very high.
It’s not impossible that a newly developing headline could push prices to record highs, but extending this summer’s rally is unlikely to occur. If the fund money begins to unwind its massive long positions, that’s a signal that prices probably won’t push much higher.
Steve Kell is a Simcoe County crop farmer and handles grain merchandizing for Kell Grain, with elevators in Belleville and Gilford.