1/1/18: Mark's "Market Talk" Blog

Today starts a new year and the hope for better economic times for those that make a living off the land. 2017 was a boring market year. On the corn side we had one good marketing event early last summer but most of us let it go by as the crop conditions at the time didn’t show much promise. The rest of the year proved to be mostly stagnate.

On December 30, 2016 March corn closed at 3.52. Last Friday March corn closed at 3.5075, you can’t get any more straight line than that. Unfortunately the year ahead of us looks like it could follow a similar pattern. We still have a huge supply of corn to work through but we are starting to see some increased demand now that we have the cheapest corn in the world.

Most ethanol plants are running full bore as higher fuel prices are promoting more ethanol usage. Japan is suddenly showing interest in importing US corn based ethanol as they push for more renewable fuel. In the past they have sourced most of their needs from Brazilin sugar cane ethanol. China has also made a commitment to increase their use of renewable fuels which could bring a huge market into play.  Livestock numbers in our country are almost record high so they will help eat away some of the excess grain we have. At the end of the day we need all of the increased demand we can get.

Today’s seed corn has proven its worth in trying conditions which is great from the production side but the ever increasing trend line yields are impacting prices. The bean market had a little more movement in the past year as last Friday’s board price was 45 cents lower than a year ago. Just like corn there are large world supplies of soybeans and other oil producing commodities.

Chinese demand continues to increase but they can’t absorb all of the extra production we are seeing worldwide. South America continues to increase their acreage and also their trend line yields. They have become more consistent producers thanks to a lot of help from US companies. They are no longer “maybe producers”.

So as we enter this New Year the game hasn’t changed much from the previous year. It will take a lot of marketing planning and some luck here and there to make ends meet. Sitting back and doing nothing may look to be the easy solution but it won’t be the smart one.  

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