By Brody Padgett, Commodities Manager
Harvest 2023 is quickly coming to an end as I type this article. Overall, harvest yield reports are generally better than most producers’ expectations, but given another challenging growing season I’m not sure how high expectations were to begin with. While temperatures were hot this summer and rains generally underdelivered, but it appears once again that today’s hybrids can produce very impressive crops so long as you catch the right rains. Our Eastern draw was fortunate to get these rains, while West of Benson wasn’t as fortunate. All in all though, I think we have a nice corn crop in our area to work with and early indications are that this year’s crop quality is everything we could ask for when it comes to ethanol and co-product production.
As the marketing year rolls into winter, it feels like the producer will be a tight holder of corn as cash prices are currently well below $5.00 per bushel. This will likely help support the local basis at above average levels as processors try to incent corn movement this winter. On the futures side, the USDA is currently projecting an end of year carryout of more than 2.1 billion bushels, which is more than comfortable. US exports have been slow given South America’s competitiveness on the heels of a large corn crop, and will likely remain slow until US prices move low enough to entice business or South America’s next crop faces a weather threat. The better than expected crop in the US also means the producer is now undersold vs projections and with large stockpiles of corn in elevators on delayed pricing, any market rallies will likely be met by the headwinds of producer selling, limiting upside. In markets like this, it’s usually best to have a series of realistic pricing objectives and be ready to pull the trigger if the market provides opportunity. Also begin to look ahead to 2024’s crop year as December 2024 corn futures are currently trading above $5.10/bu. Another year of back-to-back good South American and US corn crops will send prices on another leg lower.
As always, please feel free to reach out to Sara or myself with any contracting questions, or to get set up with the CVEC customer online portal or mobile app. Please take care to finish the harvest season safely and enjoy the upcoming holiday season!