Corn Market Analysis: March 20th, 2024

Current Pricing:

• Corn prices are hovering around $438.4 to $439.0 per bushel, a slight decrease compared to yesterday’s close.

Market Sentiment:

• The sentiment is cautiously weak. While there are concerns about potential disruptions due to the war in Ukraine, a major corn producer, other factors are putting downward pressure on prices, including recent gain cancelations from the U.S. to China– suggesting there could be a hit against the American grain market. Despite this, soybeans have rallied convincingly in recent hours, indicating grain market skepticism may be localized to American wheat. 

Factors Influencing the Market:

• Ukraine Conflict: The ongoing war in Ukraine is a wildcard. The full impact remains uncertain, while disruptions could tighten supply and increase prices. The corn sowing area is likely to decrease by 4.5% to 3.863 million hectares from 4.043 million sowed in 2023, according to the Ukrainian farm ministry’s first official sowing forecast for this year (Reuters).
• Demand: China, a significant corn importer, has recently canceled some wheat purchases, raising concerns about the overall grain market, including corn. 
• Production: Despite potential disruptions in Ukraine, increased production in other regions might be limiting prices. A solid South American or Indian planting season could cap prices or even trigger a slight decline in the coming months. 
• Seasonal Effects: It’s still early in the planting season, and sowing reports, mainly out of eastern Europe, might be widely available later. However, weather conditions during the planting and growing seasons will significantly impact yields later in the year.

Additional Considerations:

• Local MCap Grants: The recent USDA grants to small meat processors could increase demand for corn used in animal feed, providing some upward pressure on prices. However, the long-term impact of this program remains to manifest in the market.

Overall, the corn market is in a wait-and-see mode. The impact of the war in Ukraine and upcoming weather conditions are key factors to watch. While some analysts predict prices to hover around $405.96 per bushel by the end of the quarter, significant swings could occur depending on how these factors play out in the coming weeks. Additionally, Red Sea trade disruptions continue and have the potential to decrease or slow grain shipments.