AgLeaders Conference: It is conference week! On Friday 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: On Tuesday afternoon President Trump did confirm that 25% tariffs against Mexico and Canada could be coming on February 1. He also discussed a 10% tariff for China.

Export Sales Friday: Weekly export sales will be out tomorrow morning. The trade expects 700,000 - 1,700,000 tonnes for corn sales in the 1/9 - 1/16 period. This estimate range would be -34% to +39% vs. the 1,220,438 five year average. There were 135,000 tonnes of overnight sales. This would suggest we are still on, or ahead, of the goal for USDA, -11%.

Ethanol Continues to Win: USDA's current corn for ethanol goal for the year is +0.4% from one year ago. With a strong Q1 usage of +2.3% that leaves our remaining goal -0.2%. Considering our efficiency increase of +2.0% the goal for December - August weekly ethanol production is +1.8%. Ethanol production in the latest week was 1.099 million barrels per day. This was +34% from last year's weather-related setback in the same week. We already started Q2 ahead of USDA's goal. The prior six weeks were +2.8%. Now we have this week's positive number on top.

Lowered Argentina: The Buenos Aires Grains Exchange lowered its corn production view for Argentina by 1 million tonne to now 49. This comes after the Rosario Grains Exchange dropped their view to 48 last week. USDA has been at 51 for five months in a row.

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.

2025 Acreage: For a sneek preview, Allendale's 2025 corn acreage view is 93.7 million. That would be +3.2.

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 and the fact this cut still means they are getting 1 inch per week. The forecast for the corn area is 1.4 - 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.

Argentine rains over the past four weeks are -50% from normal in the corn areas. A -50% rain for Argentina, which sees 1.0 inch each week, is different than Brazil who normally sees 1.9 per week. The two week rain forecast ahead has improved for ⅔ of the production area, 0.9 - 1.6 inches yesterday to now 1.3 - 4.5. Buenes Aires is still dry at 0.3 - 0.8. 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. Today's trade also posted an Outside Day closing higher. This is lightly supportive for the overnight open. Next resistance is the 508 peak from May. Near term support for this uptrend is at 442…Rich Nelson