Chicago Board of Trade Market News
Outlook: Today’s WASDE report was just another in a long string of bearish corn market reports. The report featured growing U.S. ending stocks, a record-high U.S. corn yield, and 147 million bushels of extra corn in ending stocks. Moreover, world production and ending stocks were also revised higher in today’s report. The news has all but sealed corn’s bearish fate for the year.
The national average corn yield was pegged at a new, all-time record high of 175.4 bushels per acre (BPA), 2 percent higher than last month’s forecast and 0.8 BPA larger than last year’s record. Production across the U.S. will reach 14.578 billion bushels, 298 million more than last month’s estimate but down 4 percent from last year.
On the demand side, USDA increased corn consumption for all uses except ethanol, which the agency left at 5.475 billion bushels. Feed and residual use increased 75 million bushels to 5.575 billion, while exports climbed equally to 1.925 billion. This year’s export forecast is 16 percent lower than last year’s volume.
Despite an additional 150 million bushels of corn consumption, this year’s record yield pushed more corn into ending stocks. The 2.053 billion bushel ending stocks figure grew 147 million in this report and stand 8 percent larger than last year’s ending stocks. The ending stocks/use ratio fell 0.2 percent to 17.2 percent, the second largest figure in the past 10 years.
U.S. corn exports so far this marketing year total 225.6 million bushels, or 12 percent of USDA’s total forecast. This is behind the 5-year average pace of 15 percent for the beginning of November.
CBOT futures reacted strongly to today’s report, putting in a new life-of-contract low at $3.40 ¾. The market closed slightly above this point, however, as a sign that cheap corn will bring about some commercial buying support. Factors such as a South American weather/crop damage event or political issues could rally the corn market, but U.S. and world corn markets could very well be range bound for the next several months.