Trade may be underestimating U.S. corn demand at present, especially in the global market. Argentina is facing production issues this year and may curb exports, as a result. It is quite possible this alone could increase U.S. corn demand by 100 million bushels.

Another unknown is from ethanol manufacturing, which is still running ahead of initial USDA estimates.

It is also possible the United States could produce an above-trend corn crop and stocks will increase. If the current La Nina would last through this year’s growing season, analysts claim a corn yield as low at 148 bushels per acre is possible.

At the same time there is currently a 60 percent chance of an El Nino forming, which would put corn yield closer to 170 bushels. Not only would a yield this high satisfy projected demand, but it would cause a sizable build in carryout, as well.

An issue developing in the world market that could support U.S. exports of both corn and soybeans are the delays other origin points are facing in timely shipping. One of these is Brazil, where continuous rains have slowed harvest and delayed timely exports.

Another is the port congestion taking place in Ukraine, which is preventing it from shipping corn as fast as producers wish. This may cause buyers to shift sales to U.S. origination, especially with prices becoming more equal in the world market.

The latest cattle-on-feed numbers do not indicate increased usage in that demand sector in the near future. Cattle-on-feed numbers have weighed on corn as even with on-feed numbers that are 103 percent of last year, 94 percent placements indicate less future demand.

This low placement number is the result of cows being liquidated a year ago due to feed shortages. We are still seeing increased use of alternative feed products such as wheat and distillers grains, which is further cutting into corn demand.

Some analysts are using the lack of snowfall this winter as an indicator of a future drought. While the lack of snow pack does reduce soil moisture, it is not to that great of an extent. What moisture is being received in the Midwest is also making its way right into soil rather than running off.

Trade is also aware of the fact that one big rainfall in the spring can do more benefit to dry soils than any amount of snow.

A more immediate concern is the nitrogen loss than may be taking place because of the moderate weather, especially in fields that had anhydrous ammonia applied. This is a factor that could impact yield next year even if weather conditions return to a more normal pattern.

At this time of year we start to see a shift in what factors impact the commodity market. The greatest shift is more of a focus on weather as we move toward the spring planting season. This also tends to take attention away from grain demand and put it more on potential grain supply. These changes in market attitude can cause unexpected changes in futures directions.

Even though we will see more attention on these factors, the outside markets will still influence market direction. The primary one of these is the U.S. dollar. Not only can a stronger dollar make our grain more expensive in the world market, but it can also create selling opportunities for foreign countries that have their grain value based on the dollar.

Global economics, energy values and foreign policy will also be key factors in the market for the next several weeks.

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.