Jon Scheve with weekly market commentary made on December 20, 2024
Usually, December is a time when many traders reduce exposure to the market and choose to not participate in trading at all. This can increase market volatility during the last half of December and first few days of January.
Currently, there are several market forces that could cause price movement up or down during the holiday season and early January. Following are the ones I’m keeping an eye on:
Global Competition
Right now, US corn values are competitive globally, so that should help support demand and maintain a price floor in the short term. However, the biggest issue will be if July futures increase, because that could encourage Brazilian farmers to plant more corn acres between late January and early March. If Brazil increases planted corn acres, and they have normal weather, this could lead to additional corn exports from South America and put downward pressure on corn prices in the second half of 2025 if there is normal weather in the United States.
December Corn
There is a good chance December corn will struggle to rally in the first half of 2025. A big reason for that is many farmers are finding that they lose less money planting corn at current values versus growing beans. So, any farmer
willing to change their rotations will be watching corn and bean prices closely up until they get their crop planted in the late spring.
This means without a soybean production problem in South America over the next few months, a planting delay in the US in May, or dry weather that impacts Brazil’s second corn crop in April or May, December corn may have trouble moving significantly higher.
Basis
Corn and bean basis values have pulled back the past few weeks. Some of this could be attributed to farmers selling grain before the end of year for tax and cash flow reasons. However, there was also a noticeable change in basis right after March corn touched $4.50 last week. This may indicate a price cap for at least the next month, or until farmer selling dries up after the end of January.
Bottom line
There is good support for corn prices over the next few months, but that doesn’t mean the market has to rally. Prices could be range-bound until the final 2024 yield is determined in the January USDA report and South America’s weather for next year’s crop is better known.
Jon Scheve
Superior Feed Ingredients, LLC
9358 Oak Ave
Waconia, MN 55387
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