Jon Scheve with weekly market commentary made on December 13, 2024
In this week’s supply and demand report, the USDA increased corn export estimates a month earlier than expected. Traders seemed to have been anticipating this, because the market finished the week at the same value it was trading the day before the report.
What Happens Now?
January Report – Final Yields
The market will probably continue to trade in a tight range while it waits for the January report to see the final yield numbers. Many market participants think the corn yield will be lower than what is currently reported. However, based upon the research I have conducted after harvest was complete, I still think it could be slightly higher.
The bean yield is a different story. I suspect the national yield will be reduced in the January report. The research I’ve collected throughout the Midwest suggests the August dry weather impacted soybean yields a lot more than corn.
South America
So far, weather in South America has been good, which means normal yields there are most likely. This should keep a lid on both corn and bean prices moving forward.
Exports
Export values for US corn are competitive and should work to keep a floor under prices for at least another couple months.
Fund Activity
The funds have gone long corn recently. In August their position was short at -350,000 contracts. However, the latest report shows they are now long at +160,000 contracts. While they could add more length, there is no guarantee they will or that it will have a big impact on prices. Last year they went from a position of +400,000 contracts to -350,000 contracts and the market moved $2 per bushel on that 750,000-contract swing. This fall, over the last 5 months the market has only rallied 60 cents on a relatively large 500,000-contract swing.
Bottomline:
The market’s reaction to the USDA report this week should concern the bulls. While the report wasn’t bearish, the lack of a bullish reaction was a little worrisome. Now the question is if the corn export pace will meet USDA expectations later in the year. There are many indications the market will remain range bound until at least the January crop report.
Jon Scheve
Superior Feed Ingredients, LLC
9358 Oak Ave
Waconia, MN 55387
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