Mark's Market Talk for January 15, 2024
Jan 15, 2024
The USDA released their January grain reports last Friday and as expected it was a mover. Sometimes when you read these reports you have to scratch your head and wonder where they found these numbers. Let’s start on the corn side. They raised the 23-corn yield 2.4 bushels to a record 177.3. An increase wasn’t totally unexpected, but one of this magnitude was not. To help offset this they lowered the harvested acres by 600,000. Those acres were either abandoned or chopped so this part makes sense if you take the worst yielding acres out it will raise the average on what’s left. They also raised every usage category except exports which they left alone so the carryout only went up 57 million bushels which is bearish but not as bearish as the record yield number. That’s the number the traders will remember and that was probably what caused the biggest damage. There was a similar story on the bean side. They raised the yield .7 to 50.6 and lowered the harvested acres by 400,000. They did not play with the usage numbers like they did corn, so we ended up with a carryout of 280 million bushels while the trade was looking for 238 so the report showed 37 million bushels more than the trade expected. The funds came into the report on the short side. They were short, over 200,000 corn contracts and somewhere around 25,000 bean contracts. Traders love the bean market, and they are rarely short for very long, but times are different and today it appears there are amble beans in the world. Brazil production is still a question mark as they know the crop is short, but no one agrees on how short it might be. Meanwhile the current Argentina production number is twice what they raised last year when they had a lot of weather issues. World corn stocks went up about 400,000 bushels in this report and most of that was from better crops in China. At the end of the day this report confirmed our run of above average prices may be coming to an end. There is a lot of unpriced grain in the country. Very little wants to move at the current price, which should help prices recover a little bit in the near term. Past that it will take weather issues in this country to help us recover further. We have had a good run the past 3 years. We are not ready to throw the towel in yet, but we need to consider some options here as we try to get out from under old crop grain. Should a lot of bushels start moving to town it could affect basis levels which would provide us with a double whammy. We sure don’t need any more whammies.