Looking to the US corn market, he sees a kind of market or harvest malaise. "We've been stuck in this sideways trading range now for much of the last month and a half as we try to assess what the size of this year's crop is; export demand has been very weak. We know that feed demand is weak as well because we have far fewer cattle to feed due to the shrinking of the breeding herd over the last several years.
"We have been shrinking the breeding herd for hogs as well. Although our pigs per litter has really surged over the last couple of quarters and that's kind of offset the shrinking of the breeding herd, but it still leaves us with kind of a stagnant feed usage number as well. The only sector seeing any type of growth or potential for growth is the ethanol sector, the biofuel sector, and, even there, we're facing declining gasoline demand.
"Right now, we're kind of in an oversupply situation relative to demand, and prices have come a long way down since June."
The early harvest results have been better than expected though, said the analyst.
"The corn harvest is about 30% complete at this point. We finished the growing season with a period of extreme stress in Central and Western portions of the Midwest and we had anticipated that would shrink seed size as the crop matured faster than normal, [a development that] should result in reduced yield. But, so far, farmers have been pleasantly surprised at how well the hybrids held up. Thus far, we've been encouraged by the yields and that's done little to support a rally in the market."
Global picture
In terms of the global picture, Suderman noted that Argentina had a very small crop this past year. "We expect that to rebound with an El Nino weather pattern in 2024."
Exports from Ukraine have been restrained somewhat by the Black Sea Grain Initiative being cancelled in July, added Suderman.
"Ukraine, however, has set up humanitarian corridors and is slowly starting to increase shipments once again over both water and land."
Probably the major story on the world stage is the big increase in production in Brazil, he said, with expansion of the corn planted area, particulary for the winter corn crop, and a very favourable growing season this past year. "That surge in supply has basically offset the lost production, and the availability of corn from Argentina and from Ukraine. So that's really been pressuring the world market."
