A Look Into The 2023 Corn Market

Oct 13, 2022


A Look into the 2023 Corn Market
The corn market today is trading on two different sets of thought processes. The first is a supportive to bullish balance sheet. Ending stocks are estimated at 1.37 billion bushels from the USDA. This is a tight number with the type of demand we have experienced and the thought of less world competition due to the war in Ukraine. However, this low ending stock number depends on a continuing strong demand picture. The ethanol industry has been burdened with low oil prices and high inputs, but how long will they continue to produce ethanol with a negative profit margin? 

Poor economics such as a higher U.S. dollar and higher interest rates typically have a negative affect on commodity prices. The December 2023 corn price is around 6.30 futures today, close to the highs we set back in April of this year. Bulls are pointing to the low stocks, dry conditions, and strong current demand. Bears are pointing at poor economics, questionable future demand, and the possibility of more acres planted this spring.

1.png

As we move closer to the end of the year and people are planning for next year’s fall crops, 2023 corn profitability looks very attractive. If we are managing inputs while we manage our outputs, there is an opportunity to lock on a great ROI. Below is a snapshot of 2023 irrigated corn with current prices levels. Keep in mind, total cost of production will differ according to the operation’s farming practices, but in this illustration, we are estimating total cost of production to be $954/acre and a net ROI of over 25%.

Picture2.png

Here is another profit matrix example using dryland corn showing almost a 12% ROI using a cost of production of $538/acre and a yield of 100 bpa.

Picture3.png

Producers growing corn in 2023 should take a hard look at what can be locked in for 2023. Even with higher input prices, net return to the farm looks very attractive. We had very low plantings in spring of 2022, so it’s possible this could be a repeat of the 2012-2013 crop years. In that crop year, we had dry conditions, high input prices, high crop prices, and profitability on corn looked attractive like it does today. In the spring of 2013, we planted over 97 million acres of corn and sent corn prices lower for many years after. Producers should be protecting these profit levels, and possibly implement a strategy to protect upside and stay flexible to protect the unknown.

Read More News

Sep 14, 2023
As we look ahead to the 2024 crop year many decisions loom in the not-so-distant future. Federal Crop Insurance, Coverage levels, unit structures, and whether to add SCO or ECO must be selected for the 2024 season prior to the September 30 deadline.
Jul 11, 2023
The USDA end-of-June acreage and stocks report excited the soybean bulls. The most notable number on the report was soybean acreage reported at 83.5 million bushels, down five percent from last year. On the grain stocks side of the report, 796 million bushels of beans are in storage, down eighteen percent from last June. The current drought monitor is looking friendly for the market despite the recent rains in the central corn belt.
Jun 12, 2023
AGTRAX Bin Management Software tracks quality for all locations