Grain marketing decisions remain challenging (2024)

Many farm operators will tell you that making grain marketing decisions is one of the most difficult parts of farming. This is especially true during times of stagnant grain markets such as those occurring in recent months. In July of 2023, December corn futures on the Chicago Board of Trade for the 2023 corn crop were trading above $5 per bushel; however, December cash corn futures have not topped that level during the first few months of 2024. In addition, the basis levels at many ethanol plants and grain elevators has widened in 2024 compared to a year ago. As a result, local corn prices being offered for the 2023 corn that is still in storage and being marketed in the spring and early summer of 2024 is much lower than it was last year at this time.

Cash corn futures have primarily traded in a range of $4.30 to $4.60 per bushel during the first five months of 2024. Cash corn prices in southern Minnesota at local ethanol plants, feed mills, and grain elevators has primarily ranged from $4.20-$4.50 per bushel in 2024, with some locations across the Midwest temporarily having higher or lower cash corn prices, depending on the local basis levels. Farmers still remember a year ago in 2023, when local cash corn prices in the upper Midwest were above $6 per bushel during the first half of 2023, or 2022, when local cash corn prices in the Midwest traded at $6.50 to $7.50 per bushel during the first half of the year. This drastic change in local corn marketing opportunities has made it difficult for farmers to complete their corn marketing on the 2023 corn that is still in storage and unpriced.

Similar to corn, CBOT November soybean futures prices for the 2023 soybean crop were trading above $13 per bushel during the early months of the year. By comparison, the cash soybean futures price has remained near $12 per bushel during the first five months of 2024 and local soybean basis levels have widened out compared to the basis levels last year at this time. Cash soybean prices for unpriced soybeans in storage in southern Minnesota have traded in a range from $11.25 to $11.75 per bushel most of the time during the first few months of 2024, with slightly higher cash prices at soybean processing plants. A year ago, cash soybean prices in the Midwest exceeded $14 per bushel on many occasions during the first half of 2023.

Contributed

The much lower cash corn and soybean prices in 2024 in the spring and early summer months of 2024, compared to the last few years, have made it very difficult to market the remaining inventory of the 2023 corn and soybean crop that is still in storage. Current cash price offerings for both corn and soybeans during the first half of 2024 have been at the lowest level early in the year since the first six months of 2020. Many grain producers had 2023 breakeven levels to cover cash expenses, land costs, and overhead costs of nearly $5 per bushel for corn and over $11 per bushel for soybeans, depending on their final crop yields. There have been very few opportunities to capture those price levels since the completion of the 2023 harvest season.

For many farmers, the major marketing focus in the past couple of months has turned to trying to “lock-in” favorable prices on the 2024 corn and soybean crop, which has also been very difficult. The “new crop” CBOT December corn futures has traded in a fairly tight range of $4.60 to $4.80 per bushel most of the time since January of 2024, only briefly reaching $4.90 per bushel on a few occasions. Local ethanol plants and grain elevators in southern Minnesota have typically been offering forward contract corn prices for harvest delivery of the 2024 crop in the $4.25-$4.50 per bushel range during the past few months, which is about $1 per bushel lower than “new crop” cash corn bids a year ago at this time in 2023, and $2 per bushel below harvest price bids in the spring months of 2022. Basis levels for “new crop” corn have generally been $.30-$.40 per bushel below the CBOT December corn futures price at most locations in the upper Midwest, with some variation depending on location. This is a much wider basis level than existed in the previous couple of years in early June.

Like corn, the 2024 “new crop” CBOT November soybean futures price has traded much lower during the first few months of 2024, compared to futures prices during similar months in recent years. The November soybean futures price has generally traded between $11.50 and $12.00 per bushel in the first five months of 2024. By comparison, the harvest futures price in the first few months of 2023 was trading above $13.00 per bushel, and was above $14.00 per bushel in 2022.

The basis level for 2024 “new crop” soybeans in the upper Midwest has generally been $.70-$.80 per bushel below the CBOT November futures price in recent weeks, and $.40-$.50 per bushel below at soybean processing plants. The 2024 soybean basis levels are significantly wider than typical pre-harvest basis levels that were offered in the three previous years. Local “new crop” cash prices in the Upper Midwest for the 2024 soybean crop have generally been in the $11.00 to $11.50 per bushel range, with prices exceeding or dropping below that level a few times, depending on location and local basis levels. Price offerings at processing plants have been slightly higher.

Prior to the 2024 planting season in March and early April this year, there was considerable concern about the potential for drought during the 2024 growing season in the upper Midwest. However, above normal precipitation in the past two months has basically eliminated drought concerns in the primary corn and soybean production areas in the country. USDA released the first crop ratings for the 2024 corn crop on June 3, which showed 75% of the U.S. corn crop rated “good to excellent.” This compares to a “good to excellent” rating of 69% a year ago in early June and a five-year average of 70%. The only recent year to exceed the initial 2024 corn rating was at 76% in 2021. Nearly all major corn producing states in the upper Midwest had an initial 2024 corn crop rating between 70 to 80% in the “good-to-excellent” category.

Courtesy U.S. Drought Monitor

In the past few decades, when the initial crop rating has exceeded the previous average, the resulting U.S. corn yield has reached a record yield level about 50% of the time. The current record U.S. corn yield is 177.3 bushels per acre, which was set last year, even though there were very dry conditions in portions of the upper Midwest in 2023. USDA is currently projecting a trendline corn yield of 181 bushels per acre in 2024 and most grain marketing analysts are estimating the national 2024 U.S. corn yield between 178 and 180 bushels per acre. In any case, unless drought or some other weather issue develops later this year, there will likely be a very solid U.S. corn yield in 2024, which will likely keep U.S. corn ending stocks at fairly high levels and put downward pressure on “new crop” corn prices.

Most analysts expect the initial soybean crop rating for this year to exceed the five-year average rating, with fairly solid ratings in most of the major soybean producing states. The USDA crop progress report on June 3 listed soybean planting in the U.S. at 78% completed, which was 5% ahead of the five-year average. The soybean planting progress has been a bit slower in some portions of the upper Midwest due to excess rainfall during late May and early June. About the only thing that could be a positive for the “new crop” soybean prices would be if the final soybean planted acres are below the expectations of USDA and grain marketing analysts, or if negative weather conditions develop later this summer.

Making grain marketing decisions for 2023 grain that is still in storage, as well as for this year’s corn and soybean crop, has been very challenging during the first few months of 2024. Most farmers probably have a 2024 “breakeven” market price of over $5 per bushel for corn and over $11 per bushel for soybeans to cover crop input expenses, land costs, and overhead expenses at average crop yields. There have not been very many opportunities to “lock-in” local cash prices at or above those levels in recent months.

Unless drought conditions or other crop production problems develop later in the 2024 growing season, it is not likely that there will be a major rally in corn and soybean prices later this summer. In the absence of weather issues, corn and soybean prices in 2024 are likely to follow a more typical seasonal price pattern as we progress toward harvest.

Kent Thiesse is a Farm Management Analyst and writes the weekly "Focus on Ag" column. Contact him by phone at (507) 381-7960 or by email at kentthiesse@gmail.com.