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Corn price direction depends on more than acres and weather

Ag Marketing IQ: Keep an eye on perception of ending stocks and stocks-to-use ratio.

Naomi Blohm, senior market adviser

June 20, 2024

4 Min Read
Corn and soybeans fields
Getty Images/Willard

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 [email protected].

Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.

About the Author(s)

Naomi Blohm

senior market adviser, Total Farm Marketing by Stewart Peterson

Naomi specializes at helping farmers understand how to manage cash marketing needs and understand the importance of managing basis, delivery point considerations, cash flow needs and storage capacity. She earned her Bachelor of Arts in Political Science with a minor in Agriculture Business at the University of Wisconsin in Platteville. She has a Master of Science in Adult Education with an emphasis in Ag Economics from the UW-Platteville and a Master Certificate in Global Education, from the UW-Oshkosh.

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