Jon Scheve with weekly market commentary made on September, 30, 2022
Corn The USDA Stocks Report surprised the market with less corn in storage than previously estimated. This could lead to a carryout that is the tightest since 2012, and values may need to exceed $8 again to ration demand. However, there are several unknown variables that could affect the market moving forward. Demand Demand seems to be weakening and it is still unclear by how much. The area of demand that is getting the most attention and concern is in the exports category. Currently, exports are expected to be 10% lower than last year and 20% lower than two years ago, when futures exceeded $8. Plus, the market seems to think exports could fall another 10%, which would be a little bit more than the amount found missing in the September stocks report. Ukraine The Russia-Ukraine situation still needs to be monitored closely. With Russia annexing 15% of Ukraine, western countries are applying more sanctions. The market will be watching to see if the current export corridor out of the Black Sea is closed off after November. Mississippi River Water Levels There is also concern over significant decreases in the Mississippi River’s water level. New record low levels may be hit, which would lower the amount of corn that can be exported over the next couple of months. This could impact total export pace next year if it continues. Slowing Global Economy As the world economy slows down, corn demand everywhere may be impacted. With a US dollar at the strongest levels in 20 years it means US commodities have trouble competing on the world stage. Ethanol Ethanol grind may be slowing due to decreased gasoline usage from a slowing economy. Production The final average US yield is still uncertain and could move in either direction. Focus will then shift to South America as the market looks for any production issues in their next crop from the elevated chances of a third year La Nina. Bottomline Corn prices have been impacted by a lot of negative news already. As harvest continues, there may be some additional downside pressure. However, once the bins are filled and doors are locked, it may be difficult to pry corn out of farmers’ hands at current price levels.
Jon Scheve Superior Feed Ingredients, LLC
9358 Oak Ave Waconia, MN 55387 jon@superiorfeed.com