Fundamentally Speaking

The corn market appears to have at least started to stabilize as USDA raised exports by 25 million bushels (mb) in last week's WASDE report given an improved sales pace mostly to Mexico.

Support is also coming from ideas that USDA is well behind the curve with regard to this year's Brazilian corn production staying with its 129.0 million metric ton (mmt) corn projection while others including Brazil's Conab remain far lower closer to 118-119 mmt.

Its interesting that while the export side of the corn market has brightened over the past few weeks, increasing concern about domestic demand with feed margins in meat, dairy and poultry have struggled to varying degrees over time while ethanol profitability continues to contract in concert with tumbling crude oil prices.

It should be fairly quiet however over the next month given the upcoming holiday period as trade starts to slow heading into year end.

The focus of attention should remain on South American weather and the possibility of some Chinese purchases of U.S. corn as last year's Brazilian safrina crop supplies start to run low.

Trade will look ahead to a slew of USDA reports to be released January 9 including the monthly WASDE report, the quarterly grain stocks report as of December 1, the first estimate of 2024 U.S. winter wheat seedings and, last but not least, the final 2023 annual crop production figures.

Along these lines, maybe another potentially negative factor is after raising the 2023 US corn yield by 1.9 bushels per acre (bpa) to 174.9 bpa, USDA may feature another increase as late season harvest results continued to come in better than expected.

This chart shows the U.S. corn yield in bpa on the left-hand axis while reported on the right-hand axis is both the annual yield as a percent of the 25-year trend and the harvested/planted ratio acreage ratio.

Also reported with the figures in orange boxes is the number of top 18 producing states that set yield records with data from 1999 to the November 2023 USDA production report.

This year's yield is the second best since 2018 but still 2.0% below the 25-year trend, the fourth time in the last five years that this has happened, though the 91.8% harvested to planted ratio at 91.8% is actually the highest since 2016.

Despite trepidation earlier in the season about dry conditions both early and late in the growing season it turned out this year's corn crop was not bad at all though only three states, Indiana, Ohio and Tennessee set all-time high state yield records.

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