Which direction are corn prices heading?

By Jon Scheve, Superior Feed Ingredients, LLC

As the market moves into 2023, there are many reasons corn prices could go up or down. The following provides rationale for both.

Reasons the corn market may go higher

  • Ukraine produced around 45% less corn in 2022 compared to 2021, a drop of 800 million bushels.
  • Europe also produced nearly 500 million fewer bushels than expected.
  • Argentina has had limited precipitation so far, and forecasts indicate dry weather may continue for at least another 2 weeks. This may mean 250 million fewer bushels will be produced than expected.
  • Brazil is nearly done exporting corn until their second crop is harvested in June. Ukraine has logistical issues due to the war. This leaves the U.S. as the main corn supplier globally over the next 5 to 6 months.
  • China appears to be opening again, which could lead to more feed demand.
  • Year over year animals on feed estimates indicate feed demand may be understated by the USDA.
  • Currently, the stocks to use ratio in the U.S. is 8.7%. In 5 of the last 6 years, when the final U.S. carryout stocks to use ratio was below 9.2%, the market rallied in January. In 4 of those 5 rallying years, the market increased over 7% in value which would translate to about a 50-cent increase this year.
  • Generally, farmers seem to have enough cash on hand, and may not be interested in selling grain until more is known about the summer weather.
  • La Niña continues to last longer than expected.

Reasons the corn market may go lower

  • Export sales pace is substantially behind the USDA forecast, which could lead to carryout increases.
  • Ethanol stocks are high and the grind rate is slipping. This could lead to reductions in upcoming USDA reports and eventual carryout increases.
  • Rail logistics can be a challenge in the winter, which could lead to both export pace and ethanol movement issues.
  • La Niña is forecasted to end in February, which could mean normal weather for Brazil’s second corn crop planted in late February.
  • Russia and Australia produced big wheat crops and the commodity could be used as a substitution for corn in feed around the world. 
  • Spring 2013 was the 1 of 6 years when the stocks to use ratio was tight and corn didn’t rally in January. Instead, by mid-January futures dropped 10% in value from $6.60 to $5.94. However, by March of 2013 futures were trading back to levels similar to the last trading day of December 2012.
  • There are concerns over the world economy and the potential for a drop in grain demand as a result.
  • While China’s economy may be coming out of lockdown, some people may continue to self-isolate, which could keep food and feed demand suppressed for several more months.
  • There are concerns that as China opens up a new COVID variant could emerge and spread around the world quickly and cause demand issues everywhere.


South America’s weather over the next two months, China opening up, and global demand are variables that could impact prices moving forward. Plus, one of the biggest USDA reports of the year on Jan. 12 will provide the final yield and stocks numbers and give the market direction.

Please email jon@superiorfeed.com with any questions or to learn more. Jon grew up raising corn and soybeans on a farm near Beatrice, NE. Upon graduation from The University of Nebraska in Lincoln, he became a grain merchandiser and has been trading corn, soybeans and other grains for the last 18 years, building relationships with end-users in the process. After successfully marketing his father’s grain and getting his MBA, 10 years ago he started helping farmer clients market their grain based upon his principals of farmer education, reducing risk, understanding storage potential and using basis strategy to maximize individual farm operation profits. A big believer in farmer education of futures trading, Jon writes a weekly commentary to farmers interested in learning more and growing their farm operations.

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