The corn crop is starting to go in the ground; weather for this time of year is typical in that at any one time it can be warm or cool, wet or dry, and windy; and the market seems to have settled somewhat. In other words, normal.
“The crop progress report is showing corn at a normal pace. There’s no big delays in the forecast, and everything seems to be going normal for U.S. planting progress. There isn’t a premium right now in the market, everything is going fine and there’s no signs of any imminent weather threats,” said Betsy Jensen, Northland Farm Business Management and a producer/marketer from Stephen, Minn.
While all things considered might be described as “normal,” corn prices still are “not that great,” according to Jensen. Local prices were hovering right around $4 as of late April.
“We’ve had a little bit of a rally in the futures, a little one, but we still can’t get anything much above $4. Today, my local guy is at about $4.05, and then for July it’s $3.95, so they already are a little bit worse for July because they know they’re going to be getting an awful lot of corn (then),” she said.
At one local elevator in west central Minnesota regularly followed in this column, as of April 23, May cash corn prices were listed at $4.13, and basis was -29 cents under. The October 2024 corn futures price was listed at $4.75, and basis was +2 cents over.
And while prices aren’t great, producers who live near an end user, like an ethanol plant or a corn miller, may have a bit of an advantage over those who don’t.
“If you live next to an ethanol plant, if you live next to a corn milling plant, you’re not as at risk (as others who don’t live next to either), but we do run the risk of basis going to complete heck on us later on this summer,” she said. “So, if there is still corn in your bins, you might want to think about locking in the basis because there’s still a lot of crop out there, and there might be quite a bit that gets delivered in July and elevators probably aren’t going to want to handle all those bushels, so they will drop the basis.
“Just think about that, farmers. If you still have a significant amount (of corn) on-farm, give the grain buyer a call and let him know maybe you should do a basis fixed contract,” she added.
One thing with lower prices is that they encourage more demand, and there’s some evidence of that as U.S. export inspections are a little ahead of schedule and current U.S. corn sales are actually running ahead of USDA’s projection for exports for the year.
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“If things continue at this pace, we’re maybe going to be ahead and USDA is going to have to bump up their export inspections,” she said, adding that there is time for sales to pick up before the end of the current marketing year on Aug. 31 and the start of the new marketing year on Sept. 1.
“(The U.S.) had some of its biggest weeks of export inspections (in April). We are shipping out corn, so that is positive for our corn markets,” she said. “The lower prices are doing their job and we are using up more corn than what we thought. We still have some stocks, but we are using up more corn than we initially thought.
“This is the time of year though when we stop looking at exports and start looking at the future crop. So yes, we are kind of keeping one eye on demand, but the majority of us are looking ahead to see what kind of yields we’re going to produce for 2024,” she added.
In other market related news, Jensen pointed out that funds are still almost at a record short position right now for corn.
“The funds are very bearish corn right now, so maybe in a perfect world they can start buying that back, but for now, they are still pretty bearish when it comes to corn,” she said.
Another thing the market is keeping an eye on is South America, specifically the weather and how it may impact the planting of the second (safrinha) corn crop.
“South America is a rain forest for the most part, and so planting has been a little bit slower when it comes to the second crop of corn, but overall, it’s really going pretty well,” she said.
Other than that, there isn’t a lot of new news to move the market.
“Corn has just been kind of a boring market for the past 30 days. It hasn’t moved a whole lot, so the good news is we’re not going down anymore. The bad news is we’re not going up either,” she said.
As we move further through spring and planting continues as the weather allows, Jensen said oftentimes the market will see a weather-related rally in April and/or May.
“We usually get some kind of a weather premium, so especially if you have old crop corn, look to lock in the basis and maybe wait for a little bit of a rally to lock in the futures,” she said. “And then for new crop corn, do not forget about that carrying charge. There is a bonus if you plan ahead as prices are higher for December delivery.”