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Market Commentary for 4/17/23

Jon Scheve with weekly market commentary made on April, 14, 2023

Corn Market Observations May corn finished the week strong. Prices have not been this high since late February. Some global announcements contributed to this rally, including China’s buying of more US old crop corn and Russia indicating they may not renew the Ukraine grain deal next month. Looking forward there are still some additional factors indicating old crop corn futures values may still be too low. End User Needs for The Next Few Months The May corn contract is gaining on the July contract. This suggests that end users are aggressively looking for corn now to meet their summer needs. Plus, basis values have been increasing the last few weeks too, incentivizing grain movement sooner than later. End users in the US seem to have good coverage on for April and May. However, it seems that they do not have much covered for June, July, and August. Limited Supply in Storage Since harvest, the market has not really incentivized commercial elevators to hold grain. Instead, it suggested grain facilities should move the grain as fast as possible once farmers turned over ownership. This was illustrated in the March 31st USDA stock report with a big decrease in Iowa elevator inventories since December. Plus, Nebraska and the northwest corn belt are showing low overall inventory when comparing year over year. It may be just a matter of time before western corn belt end users have a hard time procuring more corn for their operations. Farmers Will Not Sell Much During Planting Season With elevators out of grain and farmers likely down to their last 25% of unsold grain still in storage, there could be a summer price stand-off. For the next two months farmers will be focused on planting and spraying and not much selling. Once summer weather is more known, then they will probably consider selling the last of their old crop. For instance, farmers in the southwest will likely wait to see if they will have enough precipitation to raise a crop this summer. Northern corn belt farmers will wait to see if they get their crops planted before prevent plant dates at the end of May. Spreads And Basis Indications Both the big May/July corn inverse and June/July basis values suggest July futures are undervalued. If July futures do not rally, then basis may have to do all the work to get corn moving to end users in June, July, and even August. Bean Market Observations While old crop bean prices have been erratic, it seems few farmers have much left to sell. This may be one reason the market has had a 20-cent trading range during 27 of the last 30 trading days. Anyone that does have old crop beans left unsold should be concerned that the first ship loaded with Brazilian beans, priced $2 per bushel below US beans, arrives in North Carolina later this month.

Jon Scheve Superior Feed Ingredients, LLC

9358 Oak Ave Waconia, MN 55387


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