It was a quiet week in the markets until Friday mornings export sales were released. March, May and July futures all ended the week 6 cents higher. The funds jumped in and bought 40,000+ contracts of corn on Friday ending the week short 64,367 corn contracts and long 23,624 soybean contracts.

A surprisingly large export sales report showed sales at 158 million bushels for the week with 50 million bushels to unknown destinations, 32 million to Japan and 30 million to South Korea. This was the largest single week for corn sales since March 2021. Last week’s sales increased the US pace to 3.46 billion bushels vs. the USDA’s forecast of 3.20 billion bushels.

Argentina crop conditions continue to deteriorate according to Buenos Aires Grain Exchange (BAGE) who is the premier organization in Argentina responsible for monitoring, analyzing and forecasting crop production. They updated their crop conditions last week and it continues to show a sharp fall out on conditions as dryness persists and heat moves in the coming week. They are still expecting a very good crop, but we are seeing the top end of production removed and may not see the extreme record that had been in play. This is important as the size of this crop drops the size of the US export program climbs.

The corn industry suffered a setback last week when the US House removed the Year Round E15 language from a funding bill. There was a lot of hope from the biofuel industry that this would slide through as part of a must-pass bill. A Year Round E15 waiver would clear the way for but not guarantee a major expansion of the E15 blend. Only 1.5% of the US fuel pumps are cleared to dispense E15 blends currently and most of them are in the Midwest. Estimates on how much corn demand would increase if E15 became available year-round range from 500 million to more than 2 billion bushels. An E15 expansion would take years to build infrastructure and consumer demand, but would support industry and producers

We have bounced about 40% off the low made following the January WASDE and could test the 50% mark this week. If weather continues to be negative in south America and exports remain strong we should have our lows in for the time being. I am not suggesting we cant move lower, but I look for things to stabilize in the $4.25 to $4.35 range for March futures for the next few weeks. The markets historically have a little rally in February, but it may be hard to rally much with a 2 billion plus carryout sitting on its back.

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The markets have been waiting for some direction, and they got it in last week’s WASDE! The expectations were for lower stocks and yield, and the government again went the other way. Corn prices collapsed to close 24 cents lower on Monday. After a few days of lower trade, they managed to stabilize and mount a small rally to end the week, 21 cents lower in the March contract and 22 cents lower in the May and July contracts. The funds ended the week short 98,158 corn and long 27,485 soybean contracts.

There were a few bearish surprises, with the biggest being an increase in corn yield of .5 bushels per acre to put a new record yield of 186.5. The USDA also raised harvested acres by 1.3 million. The combination of higher yield and acres resulted in a production increase of 269 million bushels from December to 17.021 billion, a new record high that well exceeds the previous record set in 2023 by 1.7 billion bushels. If the increase in production wasn’t enough to send the markets lower, the USDA made sure it went that way by increasing December 1 stocks by 300 million over the average trade guess while leaving ethanol and exports unchanged. The only positive to demand was an increase in feed and residual use by 100 million bushels which I believe should have been lower based on cattle numbers.

USDA 2025 Harvested Acres (Million acres)

USDA 2025 Yield (Bushels per acre)

USDA 2025 Production (Billion Bushels)

USDA 2025/26 US Carryout (Billion Bushels)

Last year’s report caught the trade by surprise dropping corn yield.  This year they caught us by surprise by raising yield and acres. Having been in this business for close to 30 years I guess this is something I should be accustomed to, but optimistically don’t expect to happen. The difference in the two years is that there were a lot of signs pointing to higher acres this year and we had no reason to expect lower yield given what we witnessed this fall.

Agree or disagree, these are the numbers we will be dealing with for the next year. The market will now turn its attention to South American weather and planting intentions in the US this spring. I don’t see a lot of room for demand to increase this year, so the markets job now is to discourage corn acres this spring if we want to see next year’s carryout under 2 billion bushels.

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The corn market posted a nice rally last week as it continues its up and down trend while searching for something to give it direction. The corn market has spent the last 6 months in a narrow trading range with the center at $4.45 in the March contract. March, May and July futures all ended the week 8 cents higher. The funds have stepped to the sideline heading into Monday’s report as they are long 170 corn contracts and long 67,807 soybean contracts.

We have finally made it to report day! Today at 11am the USDA will release the January WASDE which is one of the more highly anticipated reports of the year. There will be a lot of data to digest, but the biggest focus will be on yield and ending stocks. Estimates for today’s report are listed below.

USDA 2025 Harvested Acres (Million acres)

USDA 2025 Yield (Bushels per acre)

USDA 2025 Production (Billion Bushels)

USDA 2025/26 US Carryout (Billion Bushels)

Last year’s report caught the trade by surprise dropping corn yield 4bpa (183 to 179).  This fueled a rally that continued into Feb and prompted a massive amount of selling that dropped spreads and basis promptly.

While most are looking for a drop in corn yields, it stands to reason the USDA could lower demand on a lower production number. Regardless, if we could get stocks under 2 billion bushels, this corn market might find some life at any hint of weather issues, either in the US or South America.

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A trade shortened holiday week didn’t keep the funds from adding to their short position in corn last week. March, May and July futures all lost 12 cents and now have March futures testing their $4.35 support level of the last two months. The funds are short 39,208 corn and long 85,261 soybean contracts with the latest CFTC report covering through December 23^rd. (We should be up to date on both CFTC and export sales by the end of this week)

The job of the market over the next couple months is to cut corn acres either by increasing soybean prices or lowering corn prices. There should be a natural decline in acres due to rotations back to soybeans, unfortunately soybean futures continue to be on the decline and support corn. The recent $11 billion bridge payment that was announced on December 31^st will not help cut corn acres either. With corn receiving $44.36/acre and soybeans $30.88/acre the incentive to decrease corn acreage is diminished. These payments could buy or retain acres in the fringe areas, where $44 increases income 8-10%. With corn having a greater upside in yield I believe the markets are going to struggle to take many acres away unless we see a significant shift in values between the two commodities. If we fail to see an acreage shift it will be difficult to see carryout in 2027 fall below 2 billion bushels which would mean corn values long term remain flat at best.

For us to have a chance at trading nearby futures north of $4.50 on a consistent basis we need some sort of production issue in South America or weather issues here in the United States this spring. Argentina will be the first area to watch as its corn crop was recently planted. Brazil’s safrinha corn crop will not go into the ground until after the soybeans are harvested in late January and February. It seems like we will continue to see a lid on March futures around the $4.50 level until something new comes into the picture.

We are one week away from the much-anticipated January WASDE. We should start to see estimates from private groups this week. I am expecting a drop in yield that should be offset by a drop in feed demand. The key could be any adjustment to export demand as that has been very strong to this point. I will share those estimates in next week’s recap. In the meantime, I would advise working with your Didion sales representatives to get offers in place ahead of the report. We often have a lot of opportunities to capture good values in the first 30 minutes following the release of data when algorithmic trading takes place. I look for the markets to remain flat thru the first quarter of the year as we work thru a large harvest and get a better understanding of what export demand looks like long term, how south Americas crop is progressing and what planting intentions look like in the US.

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With a shortened week of trading and light volumes corn managed to find some strength, closing 6 higher in the March and July contracts while May futures closed 7 higher. The funds are estimated to be short 19,366 corn and long 154,474 soybean contracts.

Headlines about Ukraine shipping troubles and the Russian conflict added support to the markets last week. Ukraine is reporting that Russian attacks on infrastructure and ports have slowed grain exports during December. According to the Ukraine Farm Union, Ukraine wheat and corn exports are significantly below commitments. Several smaller exporters in Ukraine have defaulted on sales with the demand shifting to other suppliers. Ukraine exports are down 300 million bushels versus a year ago, which has pushed US corn exports higher by a similar amount.

The government continues to be slow to reconcile reports since the shutdown.  They have all the data but have failed to put it together and send it out. Every boat is registered for freight and every reportable position to the CFTC has long been reported so why this data hasn’t been released continues to puzzle me. Reports are that we will have all of the data by the end of the year, but we will see if that timeline is met.

Overall, the corn market has performed very well against the break in beans.  I think this is positive for corn heading into the end of the year and eventually the January Crop Report.

The markets will trade full hours on Monday, Tuesday, Wednesday and Friday this week and be closed on Thursday. I look for light volume again this week with traders out of the office. Next week we can get back to a normal trade schedule and hopefully have all data updated and reported for traders as we prepare for the January 12^th report. The corn markets put in their winter high following the January crop report last year. I wouldn’t be surprised if that happened again this year.

Happy New Year!

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