Is $5 Corn As Good As It Gets Right Now? Here's What USDA's October Report Tells Us
U.S. Farm Report 10/14/23 - Roundtable 1 from SDSU College Roadshow
If you're waiting on some excitement to enter into the corn market this fall, you may have to wait longer. Corn prices have been hovering around the $5 mark. Even though USDA slightly adjusted yields lower in the October report this week, the agency also cut demand, which one extension agribusiness specialist says indicates there may not be much motivation for prices to move much.
USDA’s latest crop production report shows an estimates national corn yield of 173 bu. per acre, which also resulted I a 70 million bushels cut to production. USA trimmed the soybean yield by 0.5 bu. per acre, down to 49.6 bu. per acre nationally, and then cut yield by 42 million bushels
“In the October report, USDA lowered corn yields from 173.8 to 173 [bu. per acre]. The effect of that was obviously production is reduced, but at the same time, they reduced exports, And they reduced some other aspects of demand.” says Matthew Elliott, South Dakota State University (SDSU) Extension Agribusiness Specialist.
USDA made several adjustments on the demand side, including:
- a 25 million bushel cut to exports
- Reduction to soybean exports, but ending stocks were left unchanged from last month at 220 million bushels.
“So, all in all, even though production was decreased quite a bit, the ending stocks level was only decreased 100 million bushels,” says Elliott. “And so we're still looking at that 15% stocks to use ratio, which would suggest prices would be pretty much where they're trading right now around that $4.80 to maybe the $5 mark.”
Elliott doesn’t see much incentive for corn prices to change much from current levels, but he says it’s a different story for soybeans.
“The soybean yield, so it was reduced, as well, and then USDA did some different things with the demand side on that, in order to keep the stocks to use level basically the same there,” he says. “And so prices for soybeans would generally maybe try to stick around that $12.50 to $13 mark, but we might see possibilities of $14 soybeans in the future, if we could see demand pick up in some other aspects, and we could reduce that to 220 million ending stocks number down below that, and maybe into the 100 million area of ending stocks available for next year."
