The Corn Demand Curve

Published by David Tedrow on

The accompanying scatter study shows the April/June monthly high for corn prices  as a function of the ratio of US corn carryout stocks to crop year corn food and industrial plus exports. The data is from the USDA April World supply/usage report. The concept is to use the least elastic portion of the corn demand curve to forecast corn price. Futures prices are trading very near  the curve derived in the 2000 through 2019 period. 

 

In 2007 corn demand dropped off sharply in the second half of the crop year which resulted in a spring corn price well below what USDA expected in April.   In 2013 demand remained strong into the summer keeping spring-summer corn prices strong to preserve a minimum pipeline carryout.

 

July corn may be able to hold above $3.25, but will probably need help from new crop, which is possible but unlikely, or a recovery in fuel demand to stage a significant rally.    

Categories: Grains

Related Posts

Grains

US Wheat stocks to Increase but world stocks to Drop

US wheat usage is projected to increase this season owing to improved export demand and price levels that have encouraged wheat as feed and boosted food usage modestly. The US wheat carryout to crop year Read more…

Grains

Strong Export Sales led USDA to Cut US Corn Carryout Stocks

USDA reduced the US 2024/2025. corn carryout stocks projection this month reflecting strong export sales this autumn. So far the sales leap has been accomplished without the participation of China. Significant sales to China would Read more…

Grains

US Wheat Outlook

Chicago wheat futures prices have been under pressure this autumn due to the outlook for an increase in old crop US wheat carryout stocks.  USDA expects a modest decrease in world wheat stocks during the Read more…