AgLeaders Conference: It is conference week! On Thursday Allendale will release the bi-annual Allendale AgLeaders Conference. The January conference typically has more depth than the July one. For this year we have made important changes. 1) The conference is now only to Allendale brokerage account subscribers, not the general public. 2) This specific one will also be more streamlined. Yes, we have given full day conferences with one hour for each of the outlooks before. Personally, I love that. However, in this environment US producers are feeling on edge. They want a clear message and clear direction on both old and new crop marketing. With that in mind the entire grouping of corn/soybean/wheat/cattle/hog speeches will run just over one hour total. Separate from that will be Drew's hour long coverage of world weather. 3) The conference is now free (for account holders). 4) The other change is we'll adjust the marketing recommendations to now only a conversation with a crop marketer. In plain speak, we have found producers love our conferences for both general information as well as clear marketing ideas. However, as we have seen in the past two years there is often a problem with the “taking action” part of that information. After the conference is released your assigned crop marketer will have a conversation with you for your farm. Account holders can insure they will get the conference by calling 800-262-7538 or by contacting their representative.

Tariffs: There were no tariffs enacted on Day 1 of the new presidency. On Monday President Trump did confirm that 25% tariffs against Mexico and Canada were likely in the first week of February. Regarding China there was no strong large tariff talk.

Fund Buying, Market Accepts: On Friday's CFTC report Managed Money was a buyer again in the latest week through 1/14, +38,882 contracts. One of the stories in corn several weeks had been strong fund buying but only a minor price response. Through 1/7 that buying since 7/9 totaled +607,329 contracts. March corn from 7/9 - 1/7 had only totaled a gain of +35 cents. This latest week's +38,882 buying was well accepted by the corn market. The price response was +16 ½ cents. This is a change from the prior story.

Basis Widens Again: Corn basis had once appreciated a full 29 cents from its harvest low into December. That would fit into the general pattern in heavy supply years. Typically, in these years basis has peaked for the year. Current ending stocks have transitioned to a normal supply year. Having said that, there appears to be no interest in playing basis as a mix between heavy and tight years. In fact, basis is 6 cents wider than where it would be in heavy supply years at this point. Current basis has widened 14 cents from its peak in December.

Acreage: We have been told that Informa/Sparks/IHS Markit, whatever they are called now, has raised their 2025 corn acreage view from 92.8 million in December to now 93.5. This is of course, like everyone else, in reaction to USDA's bullish 1/10 report. They are now at +2.9 million vs. 2024. Allendale's official view, to be released at Thursday's AgLeaders Conference, is 93.7. That would be +3.2.

Lowered Argentine Rating The Buenos Aires Grains Exchange estimates 86% of the corn crop is in normal to excellent condition. That is down from the prior week's 91%. We will agree that this seemingly strong rating does not match up with the moderate drought discussion.

Lowered Argentine Crop: On Thursday the Rosario Grains Exchange lowered its prior corn production view from a 50 - 51 million tonne range to now 48. This is their second production decline. Their original 51 - 52 view was lowered to 50 - 51 on 11/24. USDA has kept their 51 starting view unchanged. This new estimate would be slightly under last year's 50. This is not yet a story to rally on by itself.

Strong Export Sales: On Thursday USDA reported 1/2 - 1/9 export sales of 1,024,234 tonnes. This was positive at +22% vs. the five year average. The US has a price advantage for near term delivery. USDA's 2.475 billion bushels export goal for the year would be +12% vs. the five year average. Year to date sales are well ahead at +26%. The remainder of the year can slip to -11%. This week was +22%. The prior four weeks before that were +17%. USDA lowered their export view on 1/10 by -25 million bushels. They could put that back on if they wanted to.

Ethanol Production Holds Firm: On Wednesday the EIA reported ethanol production in the latest week at 1.095 million barrels per day. This was +3.9% from last year. In our view, we need weekly ethanol production at +1.8% from December - August. That is the goal. The six week pace since the start of December is +2.8%.

USDA's Production Decline: A large surprise was noted for US corn on 1/10. Fall production was revised -276 million bushels to 14.867 billion. This was the second largest decline on the January report in history. This came from a light -151,000 decline in planted acres and +186,000 for harvested. The main driver was the large -3.8 bpa hit to yields, now at 179.3 bpa. Corn yields end the year -1% from USDA’s starting view of trend, 181.0.

USDA;'s Tightened Ending Stocks: The recent quarterly Grain Stock report showed 12.074 billion bushels of old crop left over as of December 1. On the whole-year balance sheet, USDA lightly offset the production drop with a -50 million bushel trim to feed/residual use. This is a smaller offset than normally seen. The other balance sheet change was -25 million for exports. Ending stocks were lowered from 1.738 billion last month to now 1.540.

Corn Pricing: For some time, we have been trading below implied economic value. A trade policy risk discount is reasonable. The question is how much? This is also important when the corn balance sheet has tightened for seven months in a row. Our models imply a futures price of $5.60. Given we are not too concerned about trade policy changes hitting corn too much, it is more of a soybean issue, we feel a 40 cent discount is more reasonable. Being as conservative as we can, perhaps a 60 cent risk could be seen. Bottom line in our view, the balance sheet now allows $5.00 on a very conservative basis.

Brazilian rains over the recent four weeks were low in the 1st crop areas, -60% from normal. The market has yet to show real concern over this given lightly below normal temperatures. Also, though these are below normal they are still getting about 1 inch per week. The forecast for the corn area is 2.5 - 5.9 inches. The average for those two weeks is 3.2. Yield determination, when weather really matters, for the small 1st crop starts now in January. Developing 1st crop is only 24% of their corn crop. Planting for the very big 2nd crop started this month.

Rainfall last week in Argentina continued the general prior theme. Corn and soybean planting is generally in the same area. Over the past four weeks these rains have been -50% from normal.

Different than Brazil, Argentina rains at this time are usually not more than needed. The average is only 1 inch per week. There is light/moderate concern for Argentina's crop.

Argentine rains over the past four weeks are -31% from normal in the corn areas. The two week rain forecast ahead suggests 0.2 - 0.6 for 50% of the growing region and 1.1 - 1.8 for the remainder. The norm is 2.0 over two weeks. Yield determination is in January and February.

Pricing: According to our pricing models a 1.9 billion stock equals 475, 1.8 equals 500 and 1.7 returns 525 for futures. For the period ahead, until trade policy is clarified, expect an artificial discount to economic value. How much of a discount is the main question.

Chart: The corn uptrend continues. New highs were made today. The day's close, near the highs, is an additional positive sign. Next areas of resistance on the chart are the 488 high from June then the 508 peak from May. Near term support for this uptrend is at 440…Rich Nelson

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