Recent weeks tough on grain prices

By Doug Tenney, Leist Mercantile

Cindy and I were recently trying to efficiently navigate a crowded aisle at a local store. As she opted to cut to the left, I deemed right to be the faster option and chose to guide her in that direction. As per kindergarten teacher training. I heard, “uh we don’t push” with the accompanying “look.” As we left the store, she kindly reminded me, “Doug, steer your truck, not your wife.” Now that was funny, and laugher is always the best medicine. (Lesson learned).

The last 3 months of 2023 were not kind to grain prices as corn, from its mid-October high at $5.21, closed on Dec. 29 at $4.71. Soybeans had a mid-November high at $14.10, closing on Dec. 29 at $12.98. That trend continued into the first 2 weeks of January with further declines. The Jan. 12 USDA report day was a “Bad Day at Black Rock,” to borrow the title from a short story by Howard Breslin and published by The American Magazine in January 1947. Corn and soybeans were down double digits on that USDA report day with corn at $4.47 and soybeans at $12.24.  

The Jan. 12 Supply and Demand Report detailed U.S. 2023 corn production at 15.342 billion bushels, up 108 million bushels while the U.S. yield reached 177.3, a new record, and up 2.4 bushels per acre. U.S. soybean production was 4.165 billion bushels, up 36 million bushels. The soybean yield was 50.6, up .7 bushels per acre. There were two lone spots of good news as U.S. corn for ethanol increased 50 million bushels, an increase larger than expected, while U.S. winter wheat acres declined 2.3 million acres from last year, more than expected.

For several months, grains have been lacking an ongoing consistent fundamental market mover along with a steady diet of grain export sales announcements. The month’s long South America weather market was a teaser with conditions in southern Brazil too wet along with conditions in central and northern Brazil too dry. Price volatility often increased on days with wider than normal trading ranges of 20 to 25 cents for soybeans.  

Keep an eye on crude oil as strange price activity has been taking place when reviewing weekly EIA energy reports. December 2023 was bookmarked with two weekly EIA energy reports during the first and last weeks of the month showing odd price activity. Trader estimates had anticipated U.S. weekly crude oil stocks to decline. The EIA energy report detailed U.S. crude oil stocks had declined more sharply than expected. The first week of December, U.S. crude oil stocks were below trader estimates by 3.2 million barrels. The last week of December, crude oil stocks were below trader estimates by 4.2 million barrels. Yet, in both cases February NYMEX crude oil prices declined sharply in spite of bullish news. The declines ranged from $2.88 the first week, to $2.34 the second week.

Look for U.S. soybean acres to increase slightly in 2024 as producers continue to utilize and take advantage of fewer total dollars per acre compared to corn. Does that mean U.S. soybean acres will increase 5 million to10 million acres this year? No, as producers will make small adjustments in their rotation of corn and soybean acres, not radical changes. It is not a typical event for producers to plant 100% corn and zero soybeans, or vice versa. The market cares little about Ohio or U.S. corn costs of production. Why? Corn is produced in a global market and grown in multiple countries.  

Crop insurance is once again averaging December 2024 CBOT corn and November 2024 CBOT soybean prices during February for revenue protection for the upcoming growing season. Producers are quickly and with much frustration seeing first-hand the difference just one year can make for price activity. December 2024 CBOT corn mid-January was $4.82 compared to last year’s revenue price at $5.91, a decline of $1.09, or 18%. November 2024 soybeans at the same time in January were $12.01. Last year’s price was $13.76, a decline of $1.75, a drop of 13%. March 15 will be the final date to establish your coverage levels for 2024 corn and soybeans.

Trying to determine the bottom for corn and soybeans can be a tumultuous adventure when you realize corn dropped 74 cents and soybeans dropped $1.86 as detailed above. It’s like trying to catch a falling knife, it can cut you badly.

Thought for the day. “Winter, a lingering season, is a time to gather golden moments, embark upon a sentimental journey, and enjoy every idle hour.” Anonymous.

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One comment

  1. When reading weekly EIA energy reports, keep an eye on crude oil because there has been some unusual pricing behavior. December 2023 was highlighted with two weekly EIA energy reports during the beginning and end weeks of the month, which revealed unusual pricing activity.

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