Jon Scheve with weekly market commentary made on January 5, 2024
The Mato Grosso region of Brazil had been experiencing the worst drought and heat in the past 40 years. However, recent rains and more moderate temperatures have helped the crop a little. But moisture levels in that region now are up to the same level as the worst of the last 10 years when around a 10% yield reduction happened.
Everyone wants to know how bad the soybean yields will be and if there were enough extra acres planted to offset any yield reductions. The market seems to be reacting like last summer, when timely rains throughout the US helped sustain the health of the crop just enough to produce decent, but not record, yields.
It is possible farmers have “cried drought” one too many times. The market may just be tired of being fooled by social media posts of bad crops and disaster yields prematurely, and then later finding out it’s not as bad as everyone thought.
Or maybe this will be the year the market discounted the early warning signs of a real widespread problem and there will be a significant yield reduction. Only time will tell.
Third Biggest USDA Report – January 12th
This report will show the final yield for 2023 and an updated estimate of current stocks stored in bins in the United States as of last month. In general, the corn market seems heavily burdened by the 2-billion-bushel carryout, so it is unlikely the report will show anything to drive corn above $5 on the March contract.
However, few farmers seem willing to sell below $5 currently. So, regardless of the information learned in the report prices may not fall much further until more is known about the US crop this summer. I would not be surprised for corn futures to continue trading between $4.50 and $5 for another 6 months.
Jon Scheve
Superior Feed Ingredients, LLC
9358 Oak Ave
Waconia, MN 55387
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