Glacier FarmMedia | MarketsFarm – When the United States Department of Agriculture published its monthly World Agricultural Supply/Demand Estimates on Dec. 10, the big story coming out of it was a larger-than-expected cut in corn carryout.
Instead of the 32 million bushel cut the trade had estimated, the USDA slashed its 2024-25 corn carryout projection by 200 million bushels at 1.738 billion. The reduction was due to a 150 million bushel rise in exports and an additional 50 million used for ethanol. As a result, the March corn contract had its highest close since early October at US$4.49 per bushel on Dec. 10.
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Meanwhile, the U.S. soybean carryout was unchanged at 470 million bushels, while ending stocks for U.S. wheat were down 20 million bushels at 795 million.
Scott Capinegro, hedging specialist for AgMarket.net, said the trade knew corn exports and ethanol use were going strong, but many did not anticipate the USDA to raise both figures that high.
“It was shocking, but not an unknown factor,” he added. “For (the USDA) to throw that big of a number on a December report was a little bit shocking, but funds are long. Now we’re up against the 200-day moving average. Now what do you do with it?”
Capinegro also speculated Brazil’s soybean crop to be more than the 169 million tonnes the USDA reported, adding if production were at 171 million, soybean prices would’ve lost 20 U.S. cents per bushel and threaten corn’s rally.
He said the trade should be watching the corn and soybean crops in Argentina and Brazil. The Brazilian real has lost 15 per cent of its value against the U.S. dollar over the past year, which Capinegro added was not “bullish for (the U.S.) export future.”
“This (corn) rally is great, but it’s December. They tell you Thanksgiving is for the bear and December’s for the bull. So far, they’ve been right,” he said. “On Friday, the December contracts come off the board and it’s going to be interesting to see where they come off the board. We know December corn had a high (on Tuesday) at US$4.4075/bu. Is that going to be a magnet for March to break down to US$4.41/bu. and then hold again?”
Capinegro predicted the March corn contract could move up to US$4.56/bu. later this month based on the midway point between last summer’s highs and lows.
“We might just get up into that area and then trade into a 10- to 15-cent range on the downside. There’s no question the funds are going to defend themselves,” he added. “And then in January, (Donald) Trump takes over (as president) and we’ll see what going to happen there … That’s the unknown factor.”
