Inside the Market

If you listen to producers around the country, many are still perplexed and a little amazed by the amount of corn they were able to grow with such little help from Mother Nature last year. According to USDA, American farmers harvested a record corn crop of 15.23 billion bushels (bb) in 2023, posting a national yield of 174.9 bushels per acre. For many, the only significant rains of the year arrived in July and early August, leaving crops dry for long stretches, often suffering high temperatures. Of course, planting 94.9 million acres was an important part of achieving this year's record crop, but generally speaking, yields held surprisingly firm, earning high praise for the value of genetically modified crops.

The ironic twist of having success in the field is farmers' bank accounts tend to get punished. DTN's national average for cash corn was near $4.50 a bushel near early December, down from $6.78 the previous year. USDA recently estimated the cost of producing corn at $888.23 an acre in 2023 or $5.08 a bushel, based on USDA's average yield. Different farms have different costs and different yields, but generally speaking, many will be eligible for a crop insurance payment to cover part of last year's price loss. The coverage won't be so helpful in 2024, when lower average prices in February bring down protection levels.

As we head into winter, it's typical for trading in corn to turn quiet, especially when supplies are plentiful, as they now are in 2023-24. The good news is that corn demand has been active at these lower prices. Ethanol plants have been busy, producing 6% more ethanol in the early months of 2023-24 than this time a year ago. Export sales of corn have also been more active, now 33% higher than the previous year thanks to Mexico taking 432 million bushels (mb) of the 831 mb sold so far.

This may sound familiar, but the bearish threat to corn prices in 2024 will once again come from Brazil. Brazil first surpassed the U.S. in corn exports in 2022-23 and is expected to hold the lead in 2023-24. It is too early to tell just how Brazil's new crop will go, however. Brazil's larger safrinha corn crop is planted on the heels of the soybean harvest in February. In late 2023, however, central Brazil's rainy season was hotter and drier than usual, and may result in a later planting date for Brazil's corn, exposing crops to more of Brazil's dry season. Brazil's crop agency, Conab, estimates Brazil will produce 119.1 million metric tons (mmt), or 4.69 bb, of corn in 2023-24, down from the previous year's record 5.39 bb crop. USDA is estimating a 129.0 mmt, or 5.08 bb crop, but unless Brazil's weather improves soon, both estimates will need to come down, a potentially bullish boost for U.S. corn prices.

Stay tuned as the new season unfolds in early 2024.

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-- You may email Todd at todd.hultman@dtn.com, or call 402-255-8489.

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