USDA’s January reports were a game changer for soybeans but even more so for the corn market.
USDA shocked the market by lowering corn yield nearly 4 bu. per acre and production by 275 million bu. with dryness late season and at harvest.
With just a 25 million bu. drop in demand, the agency also cut ending stocks by nearly 200 million to 1.54 billion bu.
Market analyst Joe Vaclavik of Standard Grain calls it a game changer.
“The market had very clearly been discounting some friendly numbers ahead of the report. But this report was more friendly than just about anybody had expected. They took the corn yield from 183 .1 nationally for last year down to 179 .3. They did adjust harvested acreage a little bit, but the end result was a crop size that was 276 million bushels smaller than what they had previously reported.”
Demand has also been strong for corn and supportive to prices.
However, analysts say reaching $5 corn may be difficult as the corn market will be limited by farmer selling, talk of higher acres, plus the soybean market and chart resistance.
Jim McCormick with AgMarket.Net says the market is also facing tough chart resistance and as well soybeans are serving as an anchor.
“The (corn) market went right down to the technical downtrend line and stalled out. Now the question is how much further we’re gonna go. Plus, the bean market will be the anchor on the complex going into 2025.”
Soybean yield was also cut 1 bu. per acre with the extremely low moisture content at harvest resulting in a drop in production of 95 million bu.
That dropped ending stocks by 90 million to 380 million bu.
While it’s a positive move, Vaclacik says the fundamental picture isn’t as bullish for beans as it is for corn.
He says, “The report was a little bit friendlier for old crop, but the world situation is still kind of an anchor on the whole complex. You’ve got these big South American crops expected, big healthy global balance sheets for soybeans.”
USDA chose to leave South American production unchanged in the report as it may be too early for the agency to make adjustments.
However, McCormick points out early projections still indicate a record soybean crop and Brazil may make up for any problems in Argentina.
He explains, “I think nine out of 10 traders are looking for that crop to get bigger. So the northern part is a little bit wet, but overall it’s looking good. Southern Brazil is a little bit dry. But, you know, the forecast right now I’m seeing is as we get to the latter part of January and February, the rain is supposed to come. There are going to, I think at this point, which I’ll have a huge crop, 172 to 175, that’ll more than 03:44 offset at what we lost here in the US.”
And that combined with tariff fears may serve as headwinds for the soybean market moving forward and create a tug of war between corn and beans.
