Expect $4 Corn to Make USDA Lighten Up

January 20, 2014 09:00 AM
Expect $4 Corn to Make USDA Lighten Up

The USDA reports published Jan. 10 are a sign that the corn market has changed significantly for the foreseeable future, experts tell the U.S. Farm Report Market Roundtable. Specifically, producers can expect prices to be less volatile and information coming out of Washington, D.C., to be friendlier.

"The big complaint about the report was that the feed usage for corn was too large because we don’t have that many animals to eat all of the corn," says Mike Florez, Florez Trading. "But my contention is that category was undercounted for the last year and a half by the USDA, and I think they’re trying to manage prices as best they can.

"We had a real acute shortage of corn," he continues. "They didn’t like $8 corn, so they kept piling on with the negative reports, pushing the prices down. Now that we’ve reached the $4 level, I don’t think you have to fight the USDA anymore. They’re going to give you more supportive news because they don’t want you going out of business, either. They want to keep prices managed in this range, and we’re at the low end of the range. So I think you’ll probably start getting neutral to friendly reports for the ongoing future."

The feed number is one that USDA often has to back into, notes Mike Hogan, Stewart-Peterson Inc. By contrast, the way in which figures such as exports and ethanol usage are calculated has been consistent for the past 20 to 30 years.

"I think they might be loading the back end of this year when you look at the smaller herds that we have and the very good prices that we have right now," Hogan adds.

In terms of the reports and volatility, Hogan says, the crop market appears to be calming.

"I think some of the volatility is kind of coming down a little bit," he says. "It just points out that we’re in a little bit different of a world right now … . No matter what good news you throw at wheat, it just seems to keep creeping lower. Same thing on the USDA report day from that standpoint. Soybeans, we’re certainly in a weather market right now in South America that may end up getting some rain this weekend, which could be beneficial to their crop. We’ll have to see. That one’s probably the most in limbo, and that was the neutral one on the report."

Click the play button below to watch the complete U.S. Market Roundtable discussion, including a look at what it will take for prices to move up again:

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Spell Check

1/21/2014 10:15 AM

  Notice all the games being played to 'control prices.' A rigged game to say the least and it rarely benefits the farmer.

1/21/2014 10:15 AM

  Notice all the games being played to 'control prices.' A rigged game to say the least and it rarely benefits the farmer.

1/21/2014 10:50 AM

  So , your saying that the government doesn't give an honest report . Maybe it's time for farmers to organize themselves into a position of "market power " that rivals the buyers of commodities . Thy would have a better opportunity to command prices which would reflect adaquate prices for their production and labor .


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