It’s been a long, slow process trying to get this year’s corn crop off the fields in the U.S., especially in the Northern Plains. If there’s a bright spot, it’s that the delays are helping to improve basis levels in the market.
Across the U.S., corn harvest was 84 percent complete as of Nov. 24. In this region of North Dakota and Minnesota, the level of harvest completion is even lower, according to Betsy Jensen, Northland Farm Business Management and a producer/marketer from Stephen, Minn.
“We still have 16 percent of the corn in the field (in the U.S.), and if you’re in the Northern Plains you have a lot more than that,” Jensen said. “North Dakota, for example, is only 30 percent harvested at this time. Locally, when we’re talking about moisture and test weight issues, I’m not sure when that corn will even be harvested.
“There is no home for our low test weight, high moisture corn,” she continued, “so we might have a lot of snow fences this winter, unintentional snow fences, because of how the crop has turned out.”
But the good news is that the slow harvest is helping out a little bit when it comes to basis, especially at ethanol plants.
“If you’re near an ethanol plant, they do need the corn,” she said. “Even at our local elevators, we have a pretty respectable basis, if you are lucky enough to harvest. But those guys that have been able to harvest high quality corn in the Northern Plains are few and far between.”
Jensen pointed out that the current situation is definitely becoming a cash market based on what kind of quality producers have. She suggested producers work with their local grain buyer on that because everyone is struggling and there’s “just no home for that low test weight (corn).”
In her area in northwest Minnesota, Jensen said local prices are holding at about $3 per bushel, which isn’t very exciting. Most local cash bids are in that $3.10-$3.15 range.
“I don’t think that we’ve dipped below $3 cash, so we’ve been holding steady there,” she said. “If you go back a month, we were $3.40-$3.45, so it seems like we’re hitting a low. Harvest is later, so perhaps our harvest low is later as well.”
At one local elevator in west central Minnesota regularly followed in this column, corn prices were $3.38 cash and basis was -30 cents under as of Nov. 26. June 2020 corn was $3.53 and basis was -37 cents under.
“We should have bottomed out in October, but instead we’re bottoming out in November because we still have harvest going on,” she added.
On the demand side, Jensen noted that in the past couple weeks the U.S. has had a good pick-up in export sales, which has been a pleasant change as export sales had been “kind of lackluster for a while.”
One thing that could potentially help with demand is if the U.S., Mexico, Canada Agreement (USMCA) was approved by Congress, as Mexico is actually one of the top destinations for U.S. corn and Canada is also a top buyer.
Jensen said it’s frustrating to see the USMCA debate still going on, especially considering it was supposed to be ratified by Congress in April and it’s still hanging out there.
“We really need that USMCA agreement signed,” she said, adding it will benefit producers. “It’s a huge issue right now. I know we’re talking about China when it comes to soybeans, but this USMCA is a huge issue for our corn.”
Jensen isn’t sure what the hold-up is, but said it appears as though Congress just can’t seem to get its act together.
“Both sides have agreed to it, so I’m not sure why it hasn’t been ratified,” she said. “Do both sides want to hold this for something to brag about later? It’s an election year next year and everyone wants something to run on their ads about how great they are, and if they pass it today, will they seem as great next year during the election season? I’m not sure.”
It’s been especially frustrating because Canada and Mexico are huge destinations for much of the U.S. ag commodities.
“We don’t talk about them that much. China gets the headlines, but the USMCA is a huge issue for corn,” she said.
At this time, as producers try to get their corn off the fields and decide what to do with their corn, there are many things to consider.
“Right now, there is a carrying charge for corn,” Jensen said. “For the guys that have it out in the field, you can certainly try to contract that for later delivery, even into next spring. Corn to me, it seems like we’re at a bit of a bottom. This could probably be our harvest low at this time so I’m not sure I’m going to be real aggressive marketing corn at this time.
“I think corn is in a holding pattern so let’s just wait to see what happens, especially if most of the guys in the Northern Plains still have it out in the field,” she concluded.