Chicago Board of Trade Market News
Outlook: USDA’s September data revealed in today’s WASDE and Crop Production reports was as expected, but price action implied that the majority of traders feel the harvest bottom has been established as corn contracts had double digit gains. USDA data projected that yields in the Eastern Corn Belt will be slightly below trend, while yields in the Western Corn Belt remain above trend. The end result was a 1.3 bushel reduction from the August estimate for total U.S. yields to 167.5 bu. This caused production to decline by about 101 million bushels, but there was also an additional 40 million bushel decline in the beginning stocks carried over from the prior season.
Even though there was a slight 20 million bushel decline in the projected domestic use for the current 2015/16 season, the reduced supply resulted in the stocks to use ratio for U.S. corn falling to 11.6 percent. That drop was enough to make market participants take notice, as the price of U.S. corn starts to increase exponentially whenever the stocks to use ratio falls below 10 percent.