Corn exports during the fourth quarter of the marketing year were some of the poorest we have seen in the past several years. Exports during this period totaled 290 million bushels, the worst since 1985.

Total corn demand in this time frame was 2.02 billion bushels, the least amount since 2003. Corn demand has not increased since these numbers were tallied, so low totals could easily be seen in the first quarter as well.

There are thoughts that U.S. corn exports are becoming back-loaded, however. What this means is buyers are waiting for values to drop before extending coverage, and will likely do so later in the marketing year.

At the same time, analysts think soybean sales are front-loaded. This means soybean bookings are elevated right now, and will drop off as the year progresses.

Volatility in the corn complex could easily increase from what we have recently seen. The range in corn crop estimates vary from 10 billion bushels on the low side to 11 billion on the high side. The low end of these estimates would indicate corn is undervalued by almost $1 per bushel at this time.

If the corn crop were to come in at the top end of estimates, we could easily see a $1 per bushel drop in values, possibly more.

There is just as much variance in projections in what the United States may see for competition in the global corn market. Brazilian officials believe their corn exports will be a record 16 million metric tons this year.

Private firms claim lower corn production in other countries will make up for this increase in Brazilian exports. What could easily be as much of a factor for corn sales competition is how much alternative feed grain is used – mainly, wheat and barley.

Trade continues to debate what U.S. farmers may plant next year. At the present time, economics favor the production of corn over soybeans. We have seen yield drag on corn fields again this year though, so some farmers may shift back to a more traditional corn/soybean rotation by default.

There is also speculation a rally in soybeans will narrow the price spread later in the marketing year, and possibly give the market edge to that crop.

Comparisons in corn price action between this year and previous ones that were impacted by drought are being made. The most common two seasons are 1983 and 1988.

In those two years corn values topped by early September, even though drought losses were still being reported. The fact that total fund position has shrunk over the past two weeks indicates this pattern could be repeated this year, as well.

Soybean planting is under way in Brail. Brazilian farmers are not allowed to plant soybeans prior to Sept. 15. The Brazilian government believes by keeping farmers out of the fields for a certain period past harvest, it will reduce the chances of rust infection. Once planting does begin, one of the main focuses of market attention will be South American weather.

Questions are coming up over how many soybeans Brazil will be able to export this year. Many analysts believe it will export a record volume of soybeans, given projections for record production.

While Brazil’s soybean crop will likely be the largest in history, it also has an incredible amount of domestic space that needs to be filled first. Once this is accomplished, it could mean fewer soybean exports than what took place this year.

Karl Setzer is a commodity trading advisor/market analyst at Maxyield Cooperative. His commentary and market analysis is available daily on radio, in newsprint and on the Internet at www.maxyieldcooperative.com

The opinions and views in this commentary are solely those of Karl Setzer. Data used for this commentary obtained from various sources believed to be accurate.

This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.