Although prices aren’t causing much enthusiasm among producers lately, the corn market itself has shown itself to be somewhat resilient.
“We’ve actually had a pretty decent week of trading the first week in March for corn. The market has been able to see some strength,” said Randy Martinson, president of Martinson Ag Risk Management, Fargo, N.D.
“When wheat collapsed on cancellations from China on exports, corn was able to buck the trend and actually finish higher on (March 6), which was kind of an impressive move for corn knowing how tied wheat and corn are. Corn was still able to divorce itself from the wheat market and finish with some gains,” he said, adding that by March 7, corn was able to actually close above the 20-day moving average.
“We’re not looking at anything fundamental that’s out helping to push the market at this point because there’s not a lot fundamentally to help it because we’re looking at big stocks, according to the Ag Outlook Forum. And even though we’re looking at lower acres, we’re still looking at our stocks to (remain) pretty high,” he continued.
“The fundamentals are still a little daunting as far as corn is concerned, but the technicals are showing an improvement, and now with the funds taking some money off the table, doing some liquidation, it’s helped prop this market up. We’re about 20-30 cents off our (contract) lows right now in the corn market. It does look promising for this market to continue to see a little bit of push,” he added.
Looking ahead, Martinson said the rumor is that China needs to be buying corn to put into its reserve. And if that’s true, they’re going to be coming to the U.S. to get those needs met.
“So, there is some favorable export news on the horizon for corn that will help support it a little too,” he said. “But corn doesn't have the ability to do a sharp rally at this point because we’re looking at lower acres and we’re still looking at those stocks being pretty daunting and that is going to limit any run with corn.”
Looking ahead, one of the big things that will be getting a lot of attention is USDA’s March Prospective Planting Report. But also getting a great deal of attention is what USDA does as far as estimating production estimates for Brazil. Martinson said it’s not likely there will be a lot of change because the Safrinha crop, the second corn crop, is still just getting planted.
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“Nobody really knows what the potential of that crop is going to be, but we are hearing of lower acres being planted because of poor financials – the economics aren’t there to raise a lot of corn, so the acres are dropping. I think that will help support this market going forward,” he explained.
At this time, it’s looking like Brazil is coming into another warm, dry spell, according to recent forecasts, and unfavorable weather during pollination could hurt that second crop.
“It’s likely production estimates are going to continue to decline as they go forward because of lower acres and some weather concerns,” he said.
As for ethanol, things have slowed. The market is waiting to see how the Administration is going to handle things for ethanol and whether it’s going to go with the “Greek model,” which favors more use of ethanol.
“If we do, that certainly is going to be very friendly to ethanol and ethanol use going forward, so that’s something that the ethanol industry is sitting on the sidelines, waiting to see what happens,” he said.
Looking at corn prices, they fell below $4 for a little while, but basis levels have started to improve a little lately and that’s helping a little. Martinson noted that a lot of farmers moved a lot of the March basis fixed contracts, sold those bushels, and moved them, which brought some supply into the marketplace.
“Basis levels have now started to tighten up a little because of road restrictions and farmers getting busy with other things. I think we’ll see basis levels continue to be fairly decent. And then with the futures rallying, that will continue to help pull bushels out of the bin as we go through spring and early summer,” he said.
One of the troubles for corn, which has been keeping a bit of a lid on the market too, is that China has been buying a lot of corn out of Ukraine, which is more for domestic use at this time. “But once they start buying corn for their reserve, they’re going to buy it from the U.S. because ours stores better. Right now, they’ve been buying a little corn out of Ukraine for use, but we think that trend will start to switch as they go into later spring, early summer,” he said.
Looking at local prices, as of March 8, at one local elevator in west central Minnesota regularly followed in this column, the March cash price for corn was $4.01 per bushel and basis was -38 cents under. The October 2024 futures price was listed at $4.72 and basis was +3 cents over.