Economic Value – Harvest Time Corn -09/11/2020

We have found that the U.S. corn carryout as a % of industrial usage plus exports is a reliable indicator of corn price discovery. USDA presently forecasts the 2020/2021 corn carryout at 2.7 billion bushels which is 28% of food ,industrial, fuel  plus exports. The ratio suggests a high in the $4.00 to $4.50 range and lows in the $3.25 to $3.50 range. Our ranges reference the harvest time corn price range in Central Illinois.

We observe the USDA has built in a substantial cut in new crop corn feed usage. Given the livestock outlook we question whether corn prices in the current sub  $4.00 range is high enough to ration domestic feed usage. Stronger feed usage would shift the price point to the left.

Low Study

High Study