As 2019 drew to a close, bringing an end to a very difficult year for corn producers, at least they could point to some improved demand of late and the hope it will continue as they look ahead to a potentially better 2020.

“We’re finally starting to see some good, strong demand come in the corn market,” said Randy Martinson, Martinson Ag Risk Management, Fargo, N.D. “Recently we saw some confirmation of U.S. export sales with Mexico coming in and buying aggressively. That was nice to see that.

“It’s starting to show that the U.S. is becoming more competitive in the world market in exports,” he added. “(Exports) has been the one missing link as far as corn is concerned, so it’s kind of nice to finally see this.”

The improved demand is a good sign as our current export pace is running quite a bit behind what USDA expected “so we need to make some catch-up quick.”

Going forward, Martinson pointed to some potential positives that could be beneficial to the market and producers. One is the trade agreement with China that is expected to be signed in January and the expectation that China is going to buy corn from the U.S.

Another is rumors that Brazil is out of exportable bushels because they’re buying now from Argentina and that’s helping to support the market as well.

“The idea that we could start to see a little more (corn) going into other countries because of South America now starting to step away from the export market, that’s one of the things that’s going to help corn going forward,” he said.

A third potential positive is the expectation that in its upcoming January report USDA will come in and lower harvested acres and yield because of the lower test weight and quality issues.

“All are a little friendly to this market and leading to the potential to see some good strength as we go into the first part of 2020,” he said.

The USMC trade agreement, often referred to as NAFTA 2.0, has been long in the making, and although it is a positive, Martinson downplayed it somewhat.

“It’s more of a feel good thing, more of a ‘we got it done, so now we can take a sigh of relief’ thing,” he said. “It really doesn’t change much, other than it’s going to signal that we have a deal now with Mexico and Canada.

“Mexico is one of our largest buyers of corn. I think that was part of the reason why we saw the big sale to Mexico a couple weeks ago,” he continued. “They finally took a sigh of relief and said, ‘Yup, we’re going to get the deal,’ and that got them buying. It didn’t hurt that we were sitting down at some low levels as far as price is concerned.”

Lower prices do make a difference on the export market. Looking at the world market, at this time U.S. corn prices are some of the cheapest for corn in the world right now, “so it makes sense that we’re starting to see that demand come into play,” he said.

Looking at ethanol Martinson said demand “is actually not that bad.” Ethanol production had increased for 12 straight weeks, although in mid-December there was a little bit of a down turn, but not a lot.

“We’re starting to see ethanol plants gear up and produce more. That’s friendly,” he said. “The idea that China, in this trade deal, they’re really going to buy $40 billion worth of U.S. ag products (per year). They can do that, but they’re going to have to increase and buy more corn and more DDGs (dried distillers grains), as well as ethanol, more of everything, but they’re actually going to have to buy from the U.S.

“That’s going to help swing them to get where to what they need to buy and it certainly will be supportive to our market,” he added.

Although cheaper prices have helped the U.S. become more competitive on the world market, corn prices aren’t really doing all that bad, according to Martinson who pointed out that right now basis levels are sitting fairly decent, especially when you go to end users.

“That’s somewhat supportive to the market,” he said. “For the most part, cash prices are hanging right in that $3.30 area. If you go to the end users you’re getting a little bit better deal because you’re getting a little better basis.”

At one local elevator in west central Minnesota regularly followed in this column, as of Dec. 23, the January cash price for corn was $3.52 and basis was -36 cents under. June 2020 cash price was listed at $3.56 and basis was -44 cents under.

“What I’m telling guys right now is if the basis is decent, lock the basis in against the March contract. If you need to sell cash to generate for tax purposes, go ahead and sell but re-own with March call options,” he said.

“We want to keep ownership of corn through that January report and through the signing of the China trade deal, just in case this thing has got some legs. If it is good news we should see a little bit of a rally and we want to have ownership at least through that January report.”