The corn market has entered the yield guessing game as harvest begins. In the interim the demand story is dead. We have plenty of corn to handle any type of demand for the rest of the calendar year in my opinion. Moving the market dramatically higher even on reduced yields could be a challenge. Having said that, I’m hearing some market chatter that has recently surfaced citing low test weight and yield loss due to diseases. Tar spot was the new “phrase of the week” as yields in many of the ‘too wet’ areas were disappointing. Dur to that fact, I’m hearing yields look to be lowered to 175 BPA, down from 176.3. That could create a 1.2 billion bushel carryout or 200 million bushels lower than the September WASDE. This assumes that Canada may step in as a buyer as their crop is considerable short due to drought and that demand picks up as South American supplies are short
The demand side of the equation still rests with getting our export capacity back to normal in Louisiana and capturing our share of world demand. Ukraine has stepped into the void and captured more China business than previously thought in my view. However considering that Brazil has knocked itself out for meaningful corn exports due to drought while Argentina has logistical issues due to low river levels, the demand window should open up eventually. There are concerns over the effects of a potential La Niña hitting key agricultural areas in South America come October that are mounting as several meteorological institutes around the globe have raised the probability of a hot and dry growing season taking place for a second consecutive year. A La Nina could set the US up for another robust export season long term for not just corn but for beans and soymeal as well. Oats, barley, and wheat prices in the world are suggesting food inflation might be an issue and in many cases prod importers to become active.
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