MidWest Corn Winter Price Forecast – October 17, 2023

This month USDA published a modestly tighter US carryout estimate for the 2023/24 crop year based on a smaller crop estimate and smaller old crop carrying in  stocks. USDA has reduced the US national average corn yield in each of the last four monthly WASDE reports which was only partially offset by larger harvested US corn acreage estimates for 2023.  

This month USDA reduced both US corn exports and feed & residual usage but still assumed a small decrease in carryout compared to the previous month’s projection. The two billion bushel plus US 2023/24 corn carryout estimated by USDA would be more than adequate stocks to facilitate end of season pipeline needs based on historical experience.

This winter traders will focus on  crop developments in the Southern Hemisphere, the possibility that China might reenter the US corn market, and strength of feed demand as revealed by the quarterly US corn stocks reports. Demand for corn to produce ethanol appears pretty much set, but could change if there is a major shock to the petroleum market.

We have reproduced the USDA October US corn S/D and included two scatter studies 

with the winter high and low for deliverable corn as a function of the ratio carryover stocks to crop year usage excluding feed usage. The red point for 2024 assumes USDA October S/D and the close for March corn futures on October 17, 2023.

 Assuming no major shocks to the market, corn could be confined to a $4.00 to $5.50 winter trading range. Major shocks include large sales to China and severe crop problems in Argentina  and/or Brazil. The current phase of the  Southern Oscillation (El Nino) suggests 2024 crop problems in Brazil is a long shot based on past experience.