Corn Economic Value study – 11/10/2020

The 2020/2021 prospective corn supply/usage balance has transformed from large stocks to the possible need to ration supplies. The change is remarkable for being accomplished without a major summer drought which was the case in most late summer bull markets. The mid summer storm helped but crop damage was mild compared to a real weather market.

The accompanying scatter study displays the late fall summer high for central Illinois corn as a function of the ratio of corn carryout stocks to crop year food, industrial and corn exports. The USDA’s November estimate for the ratio has corn on the sharp upside part of the price curve. The market has gotten an early start so traders may avoid the need for  $7.00 plus corn to ration available supplies. Still $5.00 plus corn would fit past experience.