We are already starting to see traders prepare for the upcoming harvest across the Corn Belt. The obvious concern is what we will see for yields following a less than ideal growing season. 

Conditions started out cool across much of the Corn Belt, but quickly reversed and turned hot and dry. In fact, several regions of the U.S. faced their driest soil conditions since the drought year of 2012. Even with these conditions, many forecasters are still predicting trend yields for corn and soybeans as rains developed just in time to prevent major losses. 

This year’s yields in the United States may impact how markets act for years to come. If yields in fact do come in at trend or better this year, it will impact how much risk premium needs to be added to values in the future. 

We also need to consider total crop size this year rather than yield per acre. Elevated futures encouraged additional plantings, some of which were done on less than ideal acres. These will likely drag down the...