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.
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