(NAFB) Ending stocks and the stocks-to-use ratio are two ways to summarize everything we know about the state of supply and demand in a particular commodity market. For corn, the facts on the ground tell us the supply is tight. Very tight by those two numbers. But, says Joe Janzen from the University of Illinois, does the market need higher prices to ration out what’s left of last fall’s corn harvest? Probably not for two reasons. The first is that, while the USDA lowered the size of last fall’s corn harvest in January, demand for that crop has continued to grow through the first six months of this year. This has both the ending-stocks number and stocks-to-use ratio indicating higher prices. Still, it comes so late in the season, and this is the second reason; that the safrinha corn crop harvest in Brazil, and the imminent United States bumper crop fall corn harvest, have the market confident it can make it through to September.
Meaning the futures markets do not need to move higher to ensure enough is available. This leaves it up to the cash market, where needed, to pull corn from reluctant sellers. Iowa State University ag economist Chad Hart says farmers must watch their local basis and decide how to allocate available storage space, selling some or all of those old crop bushels to the highest-priced local market. He’s also concerned about the new crop corn and wondering if the demand binge will continue.
USDA will release its first Crop Production report in August. Its current corn yield is 181 bushels to the acre nationally. The trade has a number as high as 187
