March 2, 2021

Corn numbers confuse traders

By Tim Hoskins Iowa Famer Today 

The corn market is on the edge as traders continue to figure out the supply and demand numbers.

Karl Setzer, grain solutions team leader for MaxYield Cooperative in West Bend, says traders expected the USDA to reduce the 2013 corn yield by 3 bushels per acre in the supply and demand report from the 163.4 bu./acre estimate in February due to the delayed corn planting. The report is scheduled to be released May 10

Even with the cut in production and higher corn usage, he says that carryout could be higher than 1.5 billion bu.

“I could make the argument that new-crop corn is $1 to $1.50 per bushel overpriced.”

Setzer says the rains that caused the delayed planting means there generally is adequate moisture for the crop.

He does not think there will be much switching to soybeans mostly due to how fast corn can be planted and possible trouble finding soybean seed.

Old crop is likely undervalued by 75 cents to $1/bu, he adds.

Recently, some ethanol plants have increased their production due to better to margins. However, Setzer says the ethanol-blending margins are still not profitable, which means ethanol margins could be narrow.

On the corn export side, he says U.S. corn continues to struggle. He adds Argentina is holding corn from the world market as hedge against its weak currency. Setzer notes Brazil and China are in talks to approve Brazilian corn for sale to China.

He thinks the spread between old- and new-crop corn will continue to widen before it narrows.

On the soybean side, he says the lack of old beans could hurt demand. Setzer says there is talk soybean crushers will start to shut down earlier than normal because they can’t find beans.

He notes the crush margins are there for soybean crushers with many paying over futures prices. They can go higher and still make a profit.


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