With corn prices acting lack luster as of late, farmers who have corn in the bin or are waiting to price new crop corn are hoping for one more price rally yet this summer. Will it occur? Or will the notion of another year of large U.S ending stocks weigh on prices until harvest?
What’s happened
The June USDA WASDE report left little fresh news, with most of the report regarding corn fundamentals staying unchanged from the previous month. The USDA stuck with their February Outlook Forum yield estimate for the 2024- ‘25 corn crop at 181 bushels per acre. With no changes to production, USDA also made no changes to demand.
Old crop ending stocks for the 2023- ‘24 crop year came in at 2.022 billion bushels and new crop ending stocks for 2024- ‘25 came in at 2.102 billion bushels, unchanged from the May report figures.
Looking forward, the next USDA report will come out on Friday, June 28. This will be the Planted Acreage report and the Quarterly Stocks report. Will this report offer any friendly nuggets for a price rally? Or will it seal the deal for higher carryout levels, and keep prices trending lower?
From a marketing perspective
You’ve probably heard the very different price forecasts for the 2024- ‘25 corn crop: anywhere from $3.50 to $5.50 a bushel has been in the news headlines over the past few weeks.
You might be wondering why there is such a large discrepancy between the ranges of price possibilities. The answer lies in ending stocks and stocks to use percentage.
When you compare the ending stock and the stocks-to-use ratio against previous years, this percentage number is a fantastic indicator of whether current ending stock levels are at historically small amounts (adding justification for higher prices) or plentiful amounts (often times when prices move lower). To calculate the stocks-to-use ratio: take the ending stock number, then divide it by the total usage number, which can then be expressed as a percentage.
For example, using the June 2024 USDA WASDE data, the ending stock number for the 2024- ‘25 crop year is pegged at 2.102 billion bushels. The total corn usage number on that report was 14.805 billion bushels. This creates a perceived comfortable stocks-to-use ratio of 14.2%.
The chart emphasizes that point. (Enter stocks to use chart here?) The vertical blue (and orange) lines represent USDA ending stocks for corn over the years. The red lines on the chart represent stocks-to-use values in each grain marketing year. You can see how the current stocks-to-use value is “higher” at that 14.2%.
Look at other years in history and recall when ending stocks were large, and the stocks-to-use ratio was higher, how most years, corn prices were lower. Then look at the years when the stocks/use ratio was lower than 10% -
and remember the dramatically higher price action we saw in those years.
Prepare yourself
Right now, when market scenario planning, it is essential to be aware of the various possibilities that could allow for prices to trade either higher or lower. Do your best to be ready to capture opportunities and minimize price risks.
Be ready for anything. Perfect weather this summer or an increase in acres would make the ending stocks larger (due to more supply) and keep a lid on price.
On the flip side, adverse growing conditions could potentially lead to sharply lower ending stocks and an even lower stocks to-use ratio, lending to a potential price rally.
Reach Naomi Blohm at 800-334-9779, on X (previously Twitter): @naomiblohm, and at naomi@totalfarmmarketing.com.
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