As harvest races on across the country, the size of the 2020 is still a major unknown. However, after the latest USDA report was released this week, questions surfaced about the actual size of the 2019 crop, as well.
USDA’s latest grain stocks report released Wednesday showed old corn stocks as of September 1 were lower than expected, indicating the 2019 corn crop was smaller than USDA originally stated.
“It really does underpin the market with a bit more support,” says North. “It kind of fuels the fire for anybody that still believes the 2019 crop was overstated in terms of yield. And it really puts more pressure on the U.S. crop to perform as the USDA has pegged it in previous reports with record yields.”
North says as USDA prepares to release an updated look at 2020 crop expectations later this month, the market will keep a close eye on any adjustments to not just sticks, but adjustments to 2020 yields.
“It’ll put a lot more pressure on yield to be there and to hold up, and f not, smaller balance sheets are going to continue to create a stronger bid in this market,” adds North.
North says if you’re a seller of corn, this adjustment to old crop stocks may give you a “gift” to look at selling into next year.
“If you’re a buyer of corn, it really puts the owner of the onus on you to jump into this market and protect yourself against any potential pitfalls in a South American crop and any changes to the demand environment as we go forward,” says North.
So, has the corn market put in its lows for the year? North thinks the answer is “yes.”
“Given Wednesday’s report, it would be tough to imagine going below $3.20 on corn,” says North.
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