Corn

Earlier on this year it looked like corn could be the “go to” crop for producers, and it still could be, but these are strange times and that early outlook could be changing.

“A lot of people still want to say that corn is the prettiest crop of the year, but I think that’s changing pretty quickly. We’re down to $3.60 on December corn,” said Luke Swenson, president of The Money Farm, West Fargo, N.D. “There’s not a lot of people and a lot of balance sheets that make money with that. We’ve got guys already making the joke that – ‘Well, I’m not going to work the system, but I’m certainly not going to kill myself to get the crop in the ground this year.’ That’s a statement we haven’t heard out of farmers in a long time.

“I think you have people looking at that on balance sheets of all three of the primary crops – corn, soybeans and wheat – so, when you get into the spring, unless one of these crops basically starts an acreage war or an acreage skirmish, you’re going to see people kind of anxiously wanting to move other places or tiptoe a little bit about how fast they actually start to do planting in certain areas and how much they push,” he continued. “I think, going forward from that, you’re still looking at big corn acres, you’re still looking at a big corn stocks number.”

That said, Swenson feels “the scariest thing” for corn right now is actually a combination of two things – the fact that crude oil prices are now down to around $30 a barrel, and there’s a travel ban.

“Normally, if you have $30 crude the entire world goes on a road trip all weekend all summer long and we burn through fuel and petroleum and gas like you’ve never seen,” he said. “This year is the one scenario where you’re probably not going to see that. So, right now that’s the main thing holding back on corn in our opinion.”

On the ethanol side of the market, Swenson noted that plants are still crushing, but that they’re all weighing the pros and cons of continuing.

“It costs a lot of money to shut down and turn back on an ethanol plant, so if you’re going to do it you need to know you’re going to be doing it for a while and for sustained losses,” he said. “Right now, between where profitability is and losses and all that, there’s a lot of guys that are on edge and aren’t overly excited, but they’re still crushing. So U.S. demand is still there.”

On the bullish side, he said there are still a lot of questions out there on the quality of grain and how fast “we’re going to chew through it” and what the quantity of it is as well as what’s left over from last year’s crop.

“Seasonally, you’ve got basis 10-25 cents higher across the country,” he said. “And if we’re sitting on yet again another record crop, world record ending stocks, the U.S. pushing back toward record ending stocks for this year, that shouldn’t be the case. We should be fighting to not have corn versus fighting to buy corn.

“When March went into delivery last week we had no carry from March-July futures and we haven’t seen that in a decade in corn. That shows the market is trying to buy this crop,” he continued. “Whether or not they’ll find enough by the summer it’s still a coin flip. But right now, you look at it anywhere from an end user’s standpoint, they’re trying to pry what is loose from farmers’ hands.”

And then, within that, the livestock market is trying to decide if the corn is of a high enough quality that they can continue to feed it at their standard pace and not mess up their rations and conversion.

“That’s a very big unknown that a lot of our livestock guys are concerned about because they’re seeing fall off and conversion which means yet again we’re going to chew through it faster and the world’s going to continue to chew through those stocks faster than we’d like to see, which is good for us,” he said.

“It’s an interesting year. Take a black swan year and throw two black swans on it before the next spring even starts. It’s scary.”

Looking at local prices, at one local elevator in west central Minnesota regularly followed in this column, as of March 18 the March cash price for corn was $2.86 and basis was -50 cents under. October 2020 cash price was listed at $3.09 and basis was -50 cents under.

Expectations for corn remain uncertain

By MARK CONLON

For Farm & Ranch Guide

Earlier on this year it looked like corn could be the “go to” crop for producers, and it still could be, but these are strange times and that early outlook could be changing.

“A lot of people still want to say that corn is the prettiest crop of the year, but I think that’s changing pretty quickly. We’re down to $3.60 on December corn,” said Luke Swenson, president of The Money Farm, West Fargo, N.D. “There’s not a lot of people and a lot of balance sheets that make money with that. We’ve got guys already making the joke that – ‘Well, I’m not going to work the system, but I’m certainly not going to kill myself to get the crop in the ground this year.’ That’s a statement we haven’t heard out of farmers in a long time.

“I think you have people looking at that on balance sheets of all three of the primary crops – corn, soybeans and wheat – so, when you get into the spring, unless one of these crops basically starts an acreage war or an acreage skirmish, you’re going to see people kind of anxiously wanting to move other places or tiptoe a little bit about how fast they actually start to do planting in certain areas and how much they push,” he continued. “I think, going forward from that, you’re still looking at big corn acres, you’re still looking at a big corn stocks number.”

That said, Swenson feels “the scariest thing” for corn right now is actually a combination of two things – the fact that crude oil prices are now down to around $30 a barrel, and there’s a travel ban.

“Normally, if you have $30 crude the entire world goes on a road trip all weekend all summer long and we burn through fuel and petroleum and gas like you’ve never seen,” he said. “This year is the one scenario where you’re probably not going to see that. So, right now that’s the main thing holding back on corn in our opinion.”

On the ethanol side of the market, Swenson noted that plants are still crushing, but that they’re all weighing the pros and cons of continuing.

“It costs a lot of money to shut down and turn back on an ethanol plant, so if you’re going to do it you need to know you’re going to be doing it for a while and for sustained losses,” he said. “Right now, between where profitability is and losses and all that, there’s a lot of guys that are on edge and aren’t overly excited, but they’re still crushing. So U.S. demand is still there.”

On the bullish side, he said there are still a lot of questions out there on the quality of grain and how fast “we’re going to chew through it” and what the quantity of it is as well as what’s left over from last year’s crop.

“Seasonally, you’ve got basis 10-25 cents higher across the country,” he said. “And if we’re sitting on yet again another record crop, world record ending stocks, the U.S. pushing back toward record ending stocks for this year, that shouldn’t be the case. We should be fighting to not have corn versus fighting to buy corn.

“When March went into delivery last week we had no carry from March-July futures and we haven’t seen that in a decade in corn. That shows the market is trying to buy this crop,” he continued. “Whether or not they’ll find enough by the summer it’s still a coin flip. But right now, you look at it anywhere from an end user’s standpoint, they’re trying to pry what is loose from farmers’ hands.”

And then, within that, the livestock market is trying to decide if the corn is of a high enough quality that they can continue to feed it at their standard pace and not mess up their rations and conversion.

“That’s a very big unknown that a lot of our livestock guys are concerned about because they’re seeing fall off and conversion which means yet again we’re going to chew through it faster and the world’s going to continue to chew through those stocks faster than we’d like to see, which is good for us,” he said.

“It’s an interesting year. Take a black swan year and throw two black swans on it before the next spring even starts. It’s scary.”

Looking at local prices, at one local elevator in west central Minnesota regularly followed in this column, as of March 18 the March cash price for corn was $2.86 and basis was -50 cents under. October 2020 cash price was listed at $3.09 and basis was -50 cents under.