Summer Corn Economic Value
The completion of corn planting and the purchase of new crop corn by China has focused attention on the summer season and the potential forces on the 2021/2022 corn season. The WAOB projected the 2021/2022 US corn carryout at 1.5 billion bushels or just 17% of food, industrial usage and exports. We have scattered summer corn prices as a function of the ratio of corn carryout stocks to FSI and exports. Note that current corn values are on the high side of the scatters although not beyond the standard error of the studies.
The old crop US corn balance still has a significant impact on summer corn price formation in some years. For example in 2013 the old crop balance was very tight and the plotted point for 2013 read high on the new crop scatter study. The same could be true of this year as the 2020/2021 crop year (old crop) US corn balance sheet is very tight.
The corn market would be expected to establish a modest bear trend with favorable growing weather this summer. An unfavorable year (the most recent example the summer of 2012) could result in double digit corn prices.
Apparently the Chinese have chosen to hedge at least part of the country’s 2021/2022 corn imports against a 2012 like occurrence.