Grain Outlook

Dec 14, 2020
Outlook for corn

The corn has been in an uptrend since August. This has been somewhat surprising since COVID-19 negatively affecting the ethanol market and reduced corn usage significantly. However, several things since then have surprised the market. The first thing was China showing up as a buyer of corn for the first time in years. The market is being supported on breaks with the assumption that they we continue to buy particularly in the spring and until July when the South American crop is ready. The USDA has help matters by reducing the crop production a little and increasing exports from last year considerably. This has reduced our projected carryout for next summer from a comfortable 2 billion plus bushels to a tighter 1.7 billion with some analyst saying it should be lower. Whether they are correct or not remains to be seen, but this news has caused corn to rally a dollar a bushel since August. Presently, the market seems to be reluctant to go above long-term resistance at around 4.40 Chicago price which translate to about 4.00 at our elevators. The question now is - what can it do in the future? The increase in demand will cause it to react more to any weather problems either in South America or later in this country during the growing season. However, if that does not happen or Chinese demand is not quite what most people are predicting the long-term barriers of $4.40 will be harder to overcome. This year it is important to respect the risk but if the price contract price works for you do not be afraid to sell.

Outlook for soybeans

Like corn, soybeans have rallied over three dollars a bushel since August. This is a significant price move at any time, but since it happed during harvest is more impressive. This had to do with the significant amount of soybeans China bought since the signing of the trade deal last summer. It seems China let their stocks get too low during the trade war and are now playing catch up. Unlike corn most of the soybeans have been sold and a lot have been shipped. We have already exported one billion bushels since the crop year began on September 1, which is a record. The USDA has predicted our carryout to be only 190 million bushels which is amazing since it was 909 million bushels only two years ago. The speed of the uptick in demand has caught the market by surprise.  The market rallied to encourage farmer selling and force grain elevators to ship soybeans. It also encouraged South America to plant record soybean acres. The question remains did the market do anything to curb demand? China buying has slowed down in recent weeks and South American planted record soybean acreage, however the market remains extremely nervous over the South American crop. It seems like its sensing price action did not do enough to slow China’s appetite for soybeans.  If there are any weather problems either in South America or later during our growing season the market will react until they see a slow down in demand.

Communications Department