Corn, soy futures may have bottomed out

Grain analysts believe corn and soybean futures prices have bottomed out.

DTN lead analyst Todd Hultman told growers attending the 2024 Commodity Classic conference that corn ending stocks in the United States are forecast to be about the same level they were in the 2015-20 period.

The U.S. Department of Agriculture believes stocks are heading to 2.53 billion bushels in 2024-25, which is where they were during the period when spot corn prices were in the US$3 to $4.50 range.

There has been considerable inflation in the interim. Production costs for the upcoming season will be about 32 percent higher than what they were back then.

That is why he is forecasting corn prices in the range of $4 to $5.25 per bu. Prices were hovering near the bottom of that range during his March 1 presentation at the conference.

“That’s why I keep expecting prices to find some long-term support down in this region,” said Hultman.

The top end of the range would require some sort of weather disaster in an important growing region.

“If you can get anything near or slightly above $5 per bu. for corn this year, you’re probably going to be doing pretty good,” he said.

U.S. soybean ending stocks are forecast at 435 million bu. in 2024-25, which is in line with where they were during the 2015-20 period when spot prices were in the $8 to $10.70 range.

The cost of production for soybeans has increased 31 percent over that time, so he is forecasting 2024-25 spot prices in the $11 to $14 range.

His floor is a little higher than a 31 percent increase because there was demand stress in the 2015-20 period due to the trade war with China. That stress doesn’t exist today.

However, he noted that there is also limited bullish potential for the crop.

“Anything above $12.50 to $13 you have to take seriously,” Hultman told his farmer audience.

Al Kluis, a trader with Kluis Commodity Advisors, delivered a similar message in his presentation.

“I don’t know if we’re at the bottom of the market, but we’re close,” he said.

He is forecasting 91 million acres of U.S. corn and an average yield of 176 bu. per acre in 2024. His carryout number is 2.39 billion bu., for a 16.5 percent stocks-to-use ratio.

Kluis shudders to think what will happen if the USDA is correct and yields end up at 181 bu. per acre.

“Watch out, we could see extremely low prices this fall,” he said.

His soybean forecast calls for 87 million acres of the oilseed, an average yield of 51 bu. per acre, carryout stocks of 376 million bu. and an 8.6 percent stocks-to-use ratio.

“The outlook for soybeans is much better than it is for corn,” he said.

“I see a lot more risk for lower corn prices next fall than soybeans.”

Kluis noted that farmers will likely be in their fields earlier than usual this spring, which tends to favour more corn and spring wheat acres.

If soybean plantings come in a couple of million acres below his initial estimate and yields drop to 50 bu. per acre, “things could get exciting.”

His slide of important dates to watch garnered plenty of attention from the farmers in attendance.

“That brings the cameras out,” he said.

March 28, May 7, June 21 and July 3 were the important dates Kluis is circling on his corn and soybean charts.

He did not mention why those dates are important or whether he expects them to have a bullish or bearish influence on the market.

Tags: soybeans, futures, costs, corn, prices