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Under the Agridome 01/09 04:58
The Corn Market Escalator: The Game Isn't Over Yet
DTN Contributing Analyst Philip Shaw says with the USDA final report on the
2025 crop coming on Jan. 12, we look for surprises. In the corn market, it
surely could happen.
Philip Shaw
DTN Contributing Analyst
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**
It has been a dreary few days here in southwestern Ontario as milder weather
has overtaken much of the province. I am sure that that is causing a little bit
of angst for those of us who still have crop out. We were surely preferring
colder crisper weather for that.
January represents many things, but it usually doesn't represent good
harvest weather. Thankfully, for some of us we have playoff football games to
help us out.
Many of you know I am a big basketball fan of the Detroit Pistons. What you
don't know is that living relatively close to Detroit has made me a very big
Detroit Lions fan since my childhood. If you know anything about football, you
will know that the Detroit Lions have a very ignominious history. That team has
never been to a Super Bowl and finish this year with a record of 9 wins and 8
losses after going 15-2 last year. Interestingly, the great truth after the
season was over was there were only a few plays during the season that might
have tipped the balance the other way. In other words, even though the Detroit
Lions did not make the playoffs, they easily could have if one or two plays
went differently during this season.
I was thinking about that the other day when I was doing my daily market
intelligence with regard to the corn market. As we all know, we produced a huge
16.752-billion-bushels-plus corn crop in the United States last year which was
beyond what many of us could have ever imagined. This has had a mitigating
effect on the price of corn, but that price is higher than the year before,
even with a record crop bearing down on us. Part of the reason for that is the
record U.S. corn exports which have been off the chart.
The record corn crop and the record export pace are one thing, but at the
end of the day a whole bunch of different factors came together to put us where
we are. For instance, good weather got us to where we are; but, take a few
weeks away with contrary weather last year, and the corn crop might have ended
up where the Detroit Lions are today, not quite where they want to be. At the
same time, we can use that analogy looking ahead to muse about what happens
from here.
What I'm getting at is we're not too far away from where the Detroit Lions
find themselves looking ahead. At the present time, officials on that team are
looking toward 2026 for a few better breaks. When we think of the corn market
in a similar way, it wouldn't take much to break things up on the positive
side. That export pace is relentless and a few bad weeks in the production
fields early this spring might have the ability to put both the nearby corn
futures month and the December 2026 corn futures month into the $5 futures
price range. It will all depend on what breaks into the market here or there.
Ditto by extension in the wheat and soybean markets, too.
DTN Contributing Grains Analyst Mitch Miller recently wrote in his column
"On the Radar for 2026": "But how often have you heard the fact that in the
past five years (2021-22 to 2025-26), U.S. corn exports have increased by 18.5
million metric tons (mmt) per year while all the other major exporting
countries have seen their combined exports fall by 9.4 mmt per year? That's
because the major exporting countries (Argentina, Brazil, Russia, South Africa
and Ukraine) have increased their domestic use by a total of 27.8 mmt per year
over that five-year span." (See
https://www.dtnpf.com/agriculture/web/ag/blogs/canada-markets/blog-post/2026/01/
02/radar-2026)
Interesting stuff for sure. Let me put it this way, in some ways world
demand for corn is almost a runaway train but of course the production train in
North America is, too. At a certain point you would think that there would be
some hiccups in that narrative, just like there were with the Detroit Lions
going to the Super Bowl in 2026. However, I'm hoping the Detroit Lions find
their way with a few better breaks in 2026 -- and with regards to the corn
market, I could see the same thing happening very soon.
Remember the old axiom about prices and markets: You take the escalator up
and the elevator down. Ask yourself where are we now with regards to corn
prices, with March corn sitting at $4.44 a bushel and the December 2026
contract at $4.61 a bushel? Are we on the lower reaches of the escalator or are
we on the middle reaches of the escalator or have we even started yet?
Part of the bottom line is that $8 corn rationed and killed demand, but $3-
and $4-dollar corn has built demand and we have been efficient enough to keep
that gravy train going with production. However, just like the Detroit Lions in
2025, the corn market will surely see some hiccups ahead, most likely in the
production fields of 2026 and 2027. The law of averages says it's coming, and
we need to be ready, and we need to be visionary with regards to our market
intelligence.
It's somewhat of a different story for wheat and soybeans and surely it is
for canola as well. However, that story will be for another week. USDA will
release the final numbers on the 2025 crop Jan. 12. There are always surprises
during the January reports, but this time there might even be some chicanery.
We'll see how corn prices respond.
**
See DTN's first World Agricultural Supply and Demand Estimates (WASDE) of
2026 on Monday, Jan 12. Join DTN Lead Analyst Rhett Montgomery at 12:30 p.m.
CST for insights on the supply and demand estimates, plus Grain Stocks and
Wheat/Canola Seedings details. A live Q&A will follow the presentation.
Register for the free webinar at https://dtn.link/ta5y2m
**
The views expressed are those of the individual author and not necessarily
those of DTN, its management or employees.
Philip Shaw can be reached at philip@philipshaw.ca
Follow him on social platform X @Agridome
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