The corn market was subdued during December. The market tested the $3.65 price level only to run into resistance, falling back into a range-bound trade around $3.50. The December USDA report made no changes to the current domestic supply-demand scenario, although it adjusted the global outlook. World corn carryout increased by 4.47 mmt to 254.94 mmt, stemming from builds in China, Vietnam Brazil and Russia. This compares to 244.80 mmt and 245.39 mmt in the past two years, respectively. 

As the new year progresses, the market will focus on several factors. First, will there be any significant changes in the January supply-demand table and will the money flows adjust in the grain complex?  Second, will the U.S. dollar have a significant impact on both commodity values and our ability to maintain a strong export program? In the physical corn market, flat price will be the key in the movement of corn until post-planting, when space and time factors prompt movement. Profitable ethanol margins will support local corn values and potentially add support to futures values.  Other corn end-user margins will need to be monitored because they have the ability to strengthen demand or, conversely, add to the already massive projected carryout. South American weather could add some premium to corn values, as it has in soybeans, but corn will be less sensitive to those potential issues. The acreage battle has already begun, encouraging more soybean acres to be planted this spring. Corn could see support as it attempts to maintain acres.

(Comments in this article are market commentary and are not to be construed as market advice.)