Corn Market Comments

The highlight of the WAOB May corn reports was a very large new crop US corn carryout stocks forecast. The March planting survey had farmers increasing corn planted area this season  so traders had anticipated  a burdensome corn supply outlook in 2020/2021.

USDA shuffled old crop corn usage estimates increasing exports but dropping corn used as fuel feed-stock.

Table in million acres and bushels.

We have constructed a chart showing corn production assuming weather this summer will be poor, average and favorable relative to corn production. Our chart assumes the USDA’s current planted and harvested area estimates. Planting flexibility is limited, but farmers could cut corn area in favor of soybeans or leave marginal acres fallow. Our mid point production projection assumes a smaller yield than USDA, but both projections are in the cone formed by the standard error of the model. 

USDA anticipates a large increase in new crop corn feed usage as that category is the most responsive to price. New crop export and fuel feed-stock usage have also been assumed to show a generous increase. 

We have charted the USDA’s foreign  supply estimate for new crop corn. Note production is expected to increase less than 2% while supply increases less than one percent as beginning stocks will be  smaller.

The May corn balance was constructed assuming a big supply and low prices which will boost usage. The usage estimates would likely be smaller if weather reduced the 2020 U.S. corn crop.