Market Commentary for 11/15/24
Corn
Corn has continued to trade sideways. As of Friday, December corn has closed between $3.85 and $4.35 in 100 straight trading sessions in a row.
Farmers have largely been resilient to the low prices and unwilling to sell. However, it will be interesting to see what happens at the end of November. There are a lot of bushels still stored in commercial facilities and processing plants with December basis attached to them. Some producers hoping for higher prices may roll bushels to the March contract. Others, who are looking for cash, could just sell. If that happens, it may put downward pressure on the market.
There is a lull in the market right now. South America’s weather is not threatening. Plus, export pace and ethanol grind have been very good.
The main downside for corn is the 1.9-billion-bushel carryout. A 1-billion-bushel carryout is basically like the US being out of corn, and the market would need to be above $8 to ration demand. A 2-billion-bushel carryout is too much supply, which forces prices below $4 to incentivize demand.
That means for every 100-million-bushel change in carryout, the price needs to move about 40 cents. With corn closing the week around $4.25, or 40 cents off the low, current values seem in-line with the carryout estimate.
Beans
Similarly, January beans have also been trading sideways between $9.80 and $10.40 for the last 29 trading session.
US bean yields were definitely disappointing because of the August dry weather. However, Brazil continues to increase planted acres, which could ultimately increase the global supply in February and keep a lid on any price rally.
In the short term, Brazil’s weather impact on beans won’t become a factor until late December. Plus, US farmers seem reluctant to sell at current values so soon after harvest. This could help keep a floor under prices for the next couple of months.
Bottomline
Seasonality for corn and beans suggests a price pullback is more likely than a rally by the end of the month. Late November through December tends to be a quiet time for the market. US harvest is mostly over, and the South America weather season doesn’t start for another month. Plus, grain bins are locked, and farmers are reluctant to sell at current values.
The big questions now are:
· Will December corn finish the final 8 trading session before the delivery period in the same tight range it’s been in since late June?
· Will beans continue to bounce between $9.80 and $10.40 through the end of December?
Want to read more by Jon Scheve?
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