(Farm & Ranch Guide) – Corn prices remained stable throughout January 2014, with local bids only fluctuating about a dime throughout the month.
There could be more action in the corn market if cold weather continues, but that doesn’t mean prices will rally to early 2013 prices of about $6 per bushel.
Livestock will eat more corn. There will probably be more demand for ethanol, and farmers are less likely to deliver corn when it’s cold. It also looks like corn exports are improving.
These items show significant demand, but the overwhelming factor in the corn market remains the large supplies of 2013 corn.
“The only exciting thing out there that farmers should be watching is this is the crop insurance determination period starting Feb. 1,” said Betsy Jensen, Stephen, Minn., market analyst, editor of “Prairie Grains” and farmer. “It’s probably not a bad idea to make sales at this time – sometime in February when you are getting close to your crop insurance price.”
On the CME Group exchange, corn futures traded on Jan. 31 with March at $4.32, May at $4.38, July at $4.425, September at $4.45, and December at $4.49 per bushel.
Compared with prices on Jan. 17, March was 7.5 cents higher, May was 6 cents higher, July was 3.5 cents higher, September was 1 cent higher and December was unchanged.
In their Jan. 30 export report, the USDA noted corn export sales of 1.838 million metric tons (72 million bushels), considered very high. Corn export sales reached 86.5 percent of the current USDA estimate for the marketing year compared with 63.4 percent for the five-year average.
On Feb. 10, the USDA will release its next World Agricultural Supply and Demand Estimate (WASDE) that lists expected demand for the current marketing year. The agency left the corn exports number unchanged from December to January.
At one elevator in western Minnesota followed in this column, cash corn on Jan. 31 was $3.87 per bushel with a basis of 44 cents under. Compared with the Jan. 17 bid of $3.81, the price was 6 cents higher, and the basis had narrowed by 1 cent.
“I think there is still a chance that corn prices could go a little bit lower,” said Jensen.
She pointed out that the Chinese New Year is the longest and most celebrated holiday in China, and that could result in the loss of some customers for a while.
“You put China on vacation for a while, and they are the big mover in the corn market,” she said. “It’s a lackluster time for corn.
“Seasonally, we should see a little bit of a bump in corn – but I’m not trying to say that corn is bullish. There is a chance we could get a minor rally in the corn market, especially when China comes back from the New Year.”
She feels the situation with unauthorized-GMO corn has eased in China.
Livestock farmers across the U.S. have dealt with cold weather in 2014. Corn is a good source of energy when the weather is cold, but whether or not feeding operations increase their feeding remains to be seen.
Given the high corn prices of the last three years, livestock feeding operations have become much more efficient and have also learned to rely on distillers grains and other byproducts.
“If prices get a little bit better, it might be a good opportunity to make some sales, but I think the corn market is very quiet right now,” she said. “There are a few little bullish things that could help us get a little bump in the prices, but I encourage farmers to not mistake a bump in prices for a bullish market.
“Look for the bump to make your sales. Don’t look for the bump to make you into a bull.”
In the January WASDE report, the USDA lowered the 2013 corn carryout to 1.6 billion bushels vs. 1.79 billion bushels in December. The number remained 810 million bushels higher than the final 2012 corn carryout number of 821 million bushels.
“We do have huge supplies of corn, and right now, the ratios are favoring soybeans,” she said. “Even if we cut back corn acres in 2014, there are still sufficient supplies that it’s not like we’re going to be in a critical situation without some form of a major weather problem.
“If you are looking for $6 corn, it’s going to take a big drought to get us to that level. There certainly isn’t anything out there saying we are going to have great profits in corn in 2014.”
