Corn market lackluster in November, but cash market strong

The month of November exhibited a lackluster market with a highly anticipated report due to the missed October USDA report. It offered a slightly bullish tone because some data reported was friendly relative to what the trade was expecting. 

This year’s corn production was projected at 13.989 billion bushels, up from 10.780 billion bushels last year. Larger supplies have made this market feel much more comfortable as the carryout rests just under 1.90 billion bushels or a 14.6 percent carryout-to-use ratio, not seen since 2005. This has been the contributing factor for a lower corn market since mid-August. With lower prices forecast, the reason for increased demand has been assumed. Ethanol demand is expected to be at 4.90 billion bushels, up from 4.648 billion bushels last year but below 5.0 billion bushels in 2011-’12. 

World corn ending stocks increased from 151.42 million metric tons (mmt) to 164.33 mmt as increased U.S. production boosted previous estimates. With projected world carryout at the highest level since 2000 (see chart), world corn values should remain under pressure. The market will still have South America's weather to worry about because Argentina and Brazil are forecast to produce 26 and 70 mmt, respectively. The positive takeaway for the corn market in November was the strong cash market. Slow producer movement attributed to lower futures prices was the cause for the cash market to be so strong. Corn prices should stay sideways into the new year but lack of corn movement will keep basis firm.