The corn market posted a bearish lower monthly close for July trying to determine just how big the U.S. corn crop is.
Private firms have raised their estimates on historically high crop ratings and generally non-threatening weather, but so far have discounted production problems.
StoneX released their newest national average corn yield estimate at 188.1 bushels per acre, a new record and 7 bushels over trend line.
How Big is The National Corn Yield?
The key to how low corn prices could fall is dependent on just how much above the 181 bushel trend line yield USDA pegs national corn yields in the Aug. 12 WASDE.
Mark Schultz, chief analyst, Northstar Commodity says, “USDA is going to do it all by satellite imagery, they’re gonna do it by crop ratings in their formula, so no boots on the ground. But when you look at it from that standpoint, obviously what they’re gonna see is an awfully good looking corn crop. So my guess is you’re gonna go on up. The question gets to be, do they bump it immediately up to 184, 185, something like that?”
Corn Market Ignoring Pollination and Disease Issues
Pollination problems from tight tassel wrap and disease issues could trim yields, but so far the market is discounting it.
Jim McCormick, Co-owner, AgMarket.Net says, “i think if there’s a real issue out there Michelle, we’re really not going to know until the fall harvest and the we actually get into the field. So the market right now, I think it’s kind of downplaying it. It’s very hard for them to quantify it right now.”
How Low will Corn Prices Fall With a 185 Yield?
A mid-180 corn yield could push production above 16 billion bushels and ending stocks above 2 billion. So, could that push December corn below last year’s $3.85 low?
McCormick says it’s very likely. “If this crop would push Michelle up to 185 plus, some people say higher than that, that would push your carryout potentially over 2 billion bushels and what that does is put your stocks used closer to 14 -15%. 3:51 Historically, that could argue corn as low as $3.50.”
Farmers Have Priced Only 5% of New Crop Corn
Adding insult to injury, McCormick says very little new crop corn has been priced.
“Roughly 5% of this crop is sold, we estimate, which means you got about 15 billion bushels of unpriced corn and that is gonna probably be a drag on the market as we get into harvest.”
Farmers Still Have 2024 Corn to Sell
Plus, farmers have 2024 corn yet to sell according to Schultz.
“I would say we probably have some of this old crop corn still sitting in the farmer’s hands that was off July basis and because when the July board went off or corn went off the board, they rolled it over into September and we’d go down and typically, and this is what we did last year, you put the low in right around August 28th.” he adds.
So that trend could repeat itself this year especially since the corn market seasonally drifts lower in August as well.
