Commodity Comments – Summer 2023

By Brody Padgett, Commodities Manager

As I write this, local planting is wrapping up and we’re now hoping for some meaningful rain.  On the national level, planting season has been for the most part very smooth as well, with corn acres going in at a pace ahead of the five-year average and well ahead of last year’s miserable pace.  The lone exception being North Dakota, which lags its five-year average pace by 18% as of the week ending May 21, but is quickly making up ground.  Overall, dry conditions this spring across most of the country have made for an earlier than average planting season, but will soon become the market’s focus as we enter the growing season, with regions in the corn belt still suffering lingering effects of last year’s drought conditions.

Nationally, we got our first look at next year’s balance sheet in USDA’s May supply & demand report, and as expected the new crop corn carryout swelled to surplus territory at more than 2.2 billion bushels.  Old crop demand has lagged projections as exports suffered at the hands of high prices and a very large Brazilian crop.  We’ve also seen slower ethanol grinds in the drought-impacted areas of the Southwest corn belt as producers struggle to secure corn.  Combine this with the current projection for more new crop corn acres and a trendline 181.5 bpa yield, and December 2023’s corn chart has looked a lot like December 2013.  Certainly, arguments can be made that some acres are still in jeopardy, and the USDA’s 181.5 bpa trendline yield, which would be an all-time record by almost 5 bpa, may be a bit aggressive, but be careful not to get complacent if the market does bounce off recent lows on growing season concerns.  Our local area has experienced dry starts, late plantings and generally less than ideal growing seasons in recent years and we’ve seen that heat and a couple of well-timed rains can produce impressive crops.  Looking at CVEC’s new crop corn purchases, they feel light to me this year, especially given the cost of production, so be prepared to make catch-up sales if the market provides opportunities in June.  While we’re likely not heading back to $3 corn next year, the potential for a surplus corn crop and global macroeconomic threats means that $6, and maybe even $5 corn, may be hard to achieve in the coming year if this crop is realized.

Please feel free to call with any questions specific to shareholder delivery, or to discuss the various contracting options available to CVEC.  Also, please note that sign-up for the Flexible Pricing Option for shareholder delivery next year will begin in mid-June.  Sign-up information will be mailed out with Benson Corn Pool enrollments and will be due by July 31st.