Saturday, August 16, 2014

What’s the Downside in Corn Prices?

This week the USDA provided its latest estimate of the corn yield and resulting crop size. The USDA is using a 167 bushel per acre national average yield. This is above trend line yield (165) and also record high. With planted and harvested acreage left unchanged, this yield will result in a record large crop pegged at 14.032 billion bushels. Corn used for feed, ethanol and exports were all increased slightly from projections last month. This left ending stock projections nearly unchanged from last month at a hefty 1.8 billion bushels. Barring an early frost in the northern Corn Belt, it would appear that the era of tight corn stocks is now behind us. This makes two record large crops back to back.
World corn projected ending stocks remain at very high levels, approaching 190 million metric tons. These levels have not been seen in corn since the 1998-2000 timeframe. At that time corn prices were much lower than today, but overall corn usage was lower, as well. The advent of the ethanol industry has helped to put a price floor under the corn market, or so it seems.

The action in corn futures this week is suggestive that prices may be forming a bottom.(more)Please share this article

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