To zoom in on a phone, tablet, or touch screen, place two fingers on screen and move them apart. To zoom out pinch fingers together.

Format for Today’s Special Corn Outlook

2021-22 U.S. Corn Supply & Demand

U.S. Planted Acreage

Last year we ended up with corn acres at 93.357 mil acres which was an increase from the previous 3 or 4 years. Soybean acres came in at 87.195 mil acres which was a dramatic increase of over 10 mil acres from the past two years while wheat saw the first significant increase in a number of years. Most of this acreage increase was due the acres that were prevented plant the previous years came back into production during 2020 and 2021.

U.S. Planted Acreage Combined

Prevented plant 2 years ago at 19 mil acres and last year at 2 mil. That was 17 mil acres that went back into production and allowed total corn, bean, and wheat acres to go from 211 mil, up to 227 mil acres. An increase of about 16 mil acres over the past 2 years. When we look at that total, 227 mil acres was an acreage that was nearly maxed out. We did have planted acreage around 230 mil acres back in 2011, 12, and 13 but keep in mind that urban sprawl is gobbling up about 0.5 mil acres of prime corn and bean ground every year and as much as 1.5 mil acres when you include all crops including hay. With that in mind we may have a difficult time getting back to 230 mil acres as long as the CRP program remains in place.

U.S. Corn Yield

After we establish our acres we look at yield. Last year’s corn yield came in at 177 bpa. The trendline yield that was being projected early in the year at 179.5 bpa, we came up just a little bit short. Despite the fact that this year’s yield at 177 bpa was a little below the trendline yield was a new record. The previous record 176.6 and 176.4 back in 2017 and 2018.

U.S. Corn Yield

We can see that 177 bpa on a long-term trend chart and it did come in just below trend but next year’s trendline will be coming in a little above 180 bpa.

U.S. Corn Production

When we take our 177 bpa yield times the harvested area which this past year as 85.4 mil acres that gave us a corn crop of 15.115 bb, up a billion from the previous year and up 1.5 billion bushels from 2 year ago.

2020-21 Corn Supply & Demand

Demand for U.S. Corn 2021-22

When we look at where U.S. corn is used, the largest category for corn use is feed and residual. That is 38.1% estimated by USDA this year. A close second would be corn going to the ethanol industry and that is expected to come in at 35.9% total use. A distant third and less than half of what we use for ethanol or feed are exports which come in at 16.3%. Food and other industrial use comes in just a little bit below 10% and very minimal amount goes to seed.

Potential Feed Demand

Weekly U.S. Ethanol Production

The second largest category of U.S. demand is corn use for ethanol. When Covid-19 first impacted the U.S. in the spring of 2020 ethanol production was cut nearly in half. Then in early 2021 we had a huge spike downward based on that massive freeze that took place all the way down to the U.S. Gulf. But recently ethanol production has been extremely strong, near record levels of all-time and its expected ethanol production will remain strong through most of this year. The USDA is projecting the corn use for ethanol will be up 5.9% this year but year to date ethanol production is running up 8.6%. We believe USDA is likely too low by about 75mb. That could take USDA’s estimate from 5.325 bb up to 5.4 bb in crop reports coming out throughout the year.

U.S. Corn Exports

Corn exports hit a record level at 2.753 bb. USDA is projecting exports at 2.425 bb. That is down over 300 mb from last year but still a relatively large level. Due to crop losses in South America this export number may need to be raised by USDA as we move deeper into the late spring and summertime months.

Total U.S. Corn Use

USDA is projecting total corn use at 14.835 bb. That would be an all-time record large beating last year’s 14.82 bb. And keep in mind this number may grow to be something at 15 or even slightly above 15 bb based on South American crop losses.

U.S. Corn Supply & Demand

U.S. Corn Ending Stocks

U.S. ending stocks at 1.540 bb is up from last year’s projected ending stocks but will still be relatively small when we compare the last 20 years. We also want to keep in mind that we believe that ending stocks will likely end up somewhere between 1.3-1.4 bb so something a little bit lower on the chart and could be approaching the levels we saw last year.

U.S. Soybean Ending Stocks

Soybean ending stocks are also going to be key as the market looks at all the grains combined. Soybean stocks also looking at an increase this year up to 350 mb but still well below the years 2018, 2019, and 2020.

U.S. Wheat Ending Stocks

Wheat ending stocks are expected to decline for the 5^th consecutive year, going down to 628 mb. That is near the lowest level over the last 14 years.

U.S. Grain Stocks

When we combine the major grain stocks of corn, beans, and wheat we can see that USDA is projecting stocks this year will be up a little but still down fairly significantly from the surplus times we saw from 2015-2020.

2022-23 Corn Outlook

U.S. Prevent Plant Acres: C,B,W Combined

Last year we had a very low prevented plant total, just 1.2 mil acres of corn, beans, and wheat. Now total prevent plant was a little over 2 mil but the corn, beans, and wheat total was 1.272 mil acres. That was near historical low, and it is virtually impossible to have prevented plant less than that. Right now we’re projecting a minimal prevent plant at 2.272 mil acres. That is still up 1 million acres from last year that will reduce the number of acres that are available to plant towards crops.

CRP Enrollment

Last year CRP came in at 20.8 mil acres. That has been declining for about 14 consecutive years, but the Biden administration is providing incentives to add acres back into the CRP program. There’s about 3 to 4 mil acres to add from without exceeding the current acreage cap. The current acres enrolled in CRP as of Dec was 22.1 mil acres which means 1.3 mil additional acres have been enrolled in the CRP program that will not be available for crop acres this spring. We’d also like to keep in mind that in a year and half from now the, the 2018 Farm Bill has a max cap at 27 mil acres. And again, the Biden administration is trying to provide incentives to increase acres into CRP.

Price Comparison

Acreage Battle

Market News

South American Weather and Crops

Crude Oil

You can see a consistent uptrend that has been in place for two years now with current prices around $83-$84 per barrel. That compares to low $50/barrel a year ago.

U.S. Drought Monitor

The most recent drought monitor shows expanding and intensifies drought in the U.S. and central Plains while drought has improved in the northwestern corn belt and eastern portions of the northern Plains.

U.S. Drought Monitor Class Change

Over the past month we can see drought is expanding in the central and southern Plains while improving in the northern Plains.

Drougth Monitor Comparison

When we compare our current U.S. drought monitor to last year at the beginning of the planting season on May 4th. The biggest difference is the increase in the drought in the southern and central Plains while we’ve seen a reduction in the drought that was in ND. It is also worth noting that the bulk of the U.S. corn and bean belt, in fact the heart, is not experiencing any serious drought at this time.

Nino 3.4 Temperatures

The drought conditions in the southern Plains is likely due to a La Nina. This chart shows the sea surface temperatures in the equatorial Pacific. Zero is temperatures near normal. Anything above zero is warmer than normal and considered El Nino. Anything below average is considered La Nina. We’re currently under a mild La Nina, about 1 degree below normal Celsius. But one of things that trade is monitoring is that La Nina is expected to continue all the way through October. That could cause a continuation of the current weather conditions which is dry in the western belt and in the Plains states. That’s something the market will monitor as we head towards the springtime.

Corn Monthly Chart

Back in 2014-2020 was a period of surplus supplies of U.S. corn and resulted in corn prices from about $3-$4.40. But then we got into a tight, even rationing situation last year. We took prices into the $5.50-$7.50 range which is similar to prices that we saw in the years of shortage from 2010-2013. After a harvest low around $5 we’ve rebounded prices back into the low $6 range. But we’re still well below the highs posted in April, May, June, and July last year due to the fact stocks, at least at this time, are projected to be a little bit higher than last year. We believe relatively tight stocks is going to provide chart support around the $5.50 level. Anything from upper $5 to mid-$6 is fair game in the near term. Whether or not we can rally into the $7 to $7.50 range will depend on our U.S. stocks situation. If current stocks don’t change a lot from USDA’s projections, $6.00-$6.50 may provide a top. But if demand is strong and we start to project lower stocks, then the market may have to rally to ration prices. The bottom line is that we believe $5.50 current support for corn prices and upper $5 to mid $6 range is probably fair value going forward especially under an acreage battle this spring. Any problems with spring planting or acres or tighter stocks could result in higher prices if rationing is needed.

To return to the previous page on your mobile device, click the back arrow in the bottom tool bar.

To zoom in on a phone, tablet, or touch screen, place two fingers on screen and move them apart. To zoom out pinch fingers together.

Format for Today’s Special Corn Outlook

2020-21 Corn S&D

Demand for U.S. Corn 2020-21

Over a third of U.S. corn goes into feed. About a third is used for ethanol, 18-19% is shipped for exports and just under 10% goes for other foods and industrial purposes.

Potential Feed Demand

Weekly U.S. Ethanol Production

About a third of all U.S. corn goes into ethanol production. This chart shows the weekly ethanol production.  It’s easy to see 2017-2019 we hit a plateau for ethanol production and then the Covid-19 caused a major pullback in ethanol production and since that time we’ve been gradually increase our production back up until recently. The big spike down in Aug and early Sept was due to the fact the in the U.S. we’re running out of old crop supplies. That number should increase significantly as new crop corn becomes available.

U.S. Corn Exports

The third largest category of corn following feed and ethanol is corn that is shipped for exports. The crop year that just ended, the U.S. had record exports at 2.745 bb of corn.

Total U.S. Corn Use

Our old crop corn use just shy of 15 bb, an all-time record amount of corn used. This number would have even been bigger for feeds, exports, and ethanol if we hadn’t been on the verge of running out of supplies prior to this year’s harvest.

U.S. Corn Supply & Demand

2021-22 U.S. Corn Outlook

U.S. Planted Acres

The supply side starts with acres that were planted last spring. The U.S. planted 93.3 mil acres of corn, 87.2 mil acres of beans, and 46.7 mil acres of wheat. This is the updated information as of USDA’s Sept crop report. It’s worth noting that corn, bean, and wheat acres have all increased this past year. A lot of that is due to the fact we have not had much prevented planted compared to the previous 2 years.

U.S. Planted Acres Combined

Total planted acres for corn, beans, and wheat this year 227 mil acres. That is down from the high price years of 2013 and 2014 when we planted 230 mil acres. We must keep in mind that at least 0.5 mil acres per year goes to urban sprawl. Whether its highways, housing developments, or solar panel farms, we lose 0.5 mil acres plus per year. So 7 years ago means we’ve lost 3.5 mil acres of primary farm ground since 2014. This is likely very close to a maximum planted area unless we steal acres from other crops.

U.S. Prevented Plant Acres

Prevent plant was down to 1.266 mil acres of prevent plant this year for corn, beans, and wheat. That is near the record low from 2012. So as we look ahead to next year, prevent plant can’t get much lower than it was this year. And again, evidence that this year’s acreage was nearly maxed out.

CRP Acres

Another item that can contribute to our planted areas are CRP acres. We maximized CRP acres in 2017 at 36.8 mil acres. Since then we’ve been declining every year until this year’s low of 20.8 mil acres of CRP. But the Biden Administration has a gameplan to try and increase the acres in the CRP program and maximize that program over the next couple of years. Whether they are successful or not is yet to be determined but already know that enrollment exceeded acres that were expiring this year so CRP acres should see a small increase next year but we will not be gaining any additional acres from the CRP program heading into next year’s growing season.

Weather

6-Month Precipitation vs Average

This year when we look at 6 months of precipitation. If you draw a line from Kansas City to Chicago, north and west of that line mostly below normal precipitation. South and east of that line mostly above normal precipitation. Now 6 month precipitation does not tell us what our yields are because it depends on the timing of that rain as well.  

U.S. Drought Monitor: September 14, 2021

North of the line for Kansas City to Chicago is where we have drought conditions including severe drought in the Pacific northwest. In the eastern and southern belt into the central Plains, not much for drought at this time.

U.S. Corn Crop Condition

We’ve had some challenges with dryness throughout the year and crop conditions for corn currently at 59% G/E. Slightly below last year’s crop rating that was 61% G/E. Keep in mind, that last year’s yield was 172 bpa. USDA is projecting this year’s yield to be 176.3 bpa.

U.S. Corn Yield

In the May, June, July timeframe USDA was using a trendline yield of 179.5 bpa until they had a better feel for weather and crop potential. Heat and dryness during portions of May, June, and July had USDA lowering its estimate of the U.S. yield to 174.6 bpa in the Aug crop report but USDA then raised the yield to 176.3 bpa in the Sept crop report despite lower crop conditions. This yield at 176.3 bpa was a surprise to some and caused the market to set back. A number of analyst within the trade believe our yield will fall short of USDA’s projection in the Sept crop report at 176.3 gpa.

U.S. Corn Yield

Looking at a long-term chart, the thick red line would be the long term linear trend or trendline yield. This year’s trendline yield 179.5 bpa, just a fraction below the 180 bpa level. USDA is currently projecting a yield just slightly below trend at 176.3 bpa and it would be very close to the all-time record yield of 176.9 bpa.

U.S. Corn Production

When we combine our yield at 176.3 bpa and our harvested area which is estimated 85.1 mil acres, you get production at just 14.99 bb, just below 15 bb of corn production this year. That would be the second largest production on record.

U.S. Corn Supply & Demand

Items that May Influence the Markets

Crude Oil

This chart shows the crude oil markets and we’re stabilizing around the $70/barrel level. Compare that to a year ago when we were stabilizing around $40/barrel. Much higher crude oil prices versus a year ago is good news and supportive for corn and soybean oil.

U.S. Dollar Index

A lower U.S. dollar means that U.S. products are cheaper for U.S. for global buyers. Therefore, if we want strong exports a relatively low U.S. dollar index is a good thing. Currently the U.S. dollar index is trading around the 93 levels. That’s up from the lows in May and June but it’s down significantly from a year and a half ago. In fact, that 93 level where we’re trading right now is very close to where we were a year ago.

Global Drought Monitor

South America had a severe drought. Brazil’s northern and northwestern corn growing region experience severe drought and it really did a number on their Safrinha corn crop. In fact, Brazil’s Safrinha corn crop lost about a billion bushels of production due to drought. It’s also worth noting that Argentina’s growing region that they’re having some moderate drought issues as well. It is just now entering their planting season but it is something that will need to be monitored going forward.

El Nino/La Nina Forecast

This graph is from NOAA and shows the sea surface temperatures in the equatorial Pacific. The zero line is where sea surface temperatures are about average. Anything above zero would be El Nino.  Anything below average would be considered La Nina or colder than normal sea surface temperatures. The heart of South America’s growing season is Nov-Feb. Last year we had La Nina which was setting in when South America was planting and we remained in a La Nina position right through their growing season. Sea surface temperatures this year are cooling off. They’re below average and it’s projected we’ll have another La Nina, again beginning at their planting season and lasting through their growing season. In fact, this year’s La Nina is forecasted to be even stronger than last year. This does not guarantee that South America will have drought or unfavorable weather but it does bear watching.

Items that May Influence the Markets Cont.

U.S. Corn Ending Stocks

Corn ending stocks at just 1.187 bb and stocks to use similar to 2013-2014. USDA is projecting stocks to increase and that has taken a little bit of pressure off the markets with harvest approaching as well. This ending stocks projection of 1.4 bb could easily be at or below last year’s 1.187 bb.

U.S. Soybean Ending Stocks

Soybean stocks extremely tight this past year at 175 mb. Projected to be extremely tight again next year. So soybeans do not look like they’re in a position to see any major price break. In fact, we’ll be looking for an increase in acreage due to the significant increase in renewable diesel that is being projected by the industry.

U.S. Wheat Ending Stocks

U.S. wheat ending stocks expecting to see a major pullback again. It would be the 5^th year in a row of reduction in wheat stocks. Keep in mind, global wheat stocks are tight as well.

U.S. Grain Stocks

Corn, beans, and wheat stocks this coming year expected to be about equal to what we were this past year which is an extremely tight level. When we look at stocks to use in the coming year, it’s going to be similar to what we saw in the tight stock years of 2010-2013.

Corn Monthly Chart

It would be very natural to ask if the rally of 2021 is over and we’re headed back to $3-$4. We were there for 6 years in a row but these were years of surplus corn as well as surplus beans and wheat as well. When we look at years of shortage, at the 2010-2013 where we spent most of the time between $5.50-$7.50 for 2 ½ years. This past spring we rallied corn up to the $7.50 type level due to shortages of corn and beans. We could be tight on corn, beans, and wheat next year. Prices have re-treated towards the $5 level over the past couple of weeks but that was a bearish crop report, combined with the U.S. Gulf shutdown due to hurricane Ida, add in the pandemic resurgence of Covid-19 primary through the Delta variant and then this week concerns regarding China surfaced when Evergrande Corp, China’s largest real estate developer missed a debt payment and that caused concern. All of these items have pushed us down to a level that is likely at the very low end of fair value. Don’t be surprised to see prices work back higher as we move towards next spring. We are going to have a tight balance sheet this year. That is almost a certainty. Any threat to South American or U.S. production this winter or into the spring and summer growing season could cause extreme volatility, similar to what we saw this past year. The bottom line is current corn prices are at the very low end, if not below fair value given the supply and demand scenario that is set up going into next year.

To return to the previous page on your mobile device, click the back arrow in the bottom tool bar.

To zoom in on a phone, tablet, or touch screen, place two fingers on screen and move them apart. To zoom out pinch fingers together.

Format for Today’s Special Corn Outlook

2020-21 Corn Demand Outlook

Demand for U.S. Corn 2020-21

When we look at U.S. demand for corn this pie chart shows where corn is used. The largest demand category is feed and residual at 38% of total U.S. corn used. Ethanol consumes just shy of 34%, so a close 2^nd while export this year expected to be about 18% total use and then additional food and industrial use accounts for a little bit less than 10%. Over 90% of corn in the U.S. is used for either feed, ethanol, or exports.

Potential Feed Demand

Weekly U.S. Ethanol Production

The second largest demand category in the U.S. is corn use for ethanol. This chart shows ethanol production over the last 11-12 years. It’s clear to see we had a major reduction in ethanol production due to covid back in 2020 and then this year we had a sharp spike due to the freeze and ice conditions that shut down a number of ethanol plants in early 2021. But for the most part, ethanol production has rebounded back to a similar level we from 2017 up until the pandemic in early 2020. USDA’s corn use for ethanol estimate for this current year is 5.075 bb. That would be up 4.6% from last year which was reduced due to covid. Currently ethanol production is running up 3.2% and so at this point we’re running just a little behind USDA’s target.

U.S. Corn Exports

The U.S. third largest demand category is corn shipped for exports. This year’s exports, although they were reduced last month, at a record level of 2.775 bb. Strong demand from China one of the leading factors giving us the big exports this current crop year.

Total U.S. Corn Use

USDA is projecting total corn use at an all-time large demand at just over 15 bb.

U.S. Corn Supply & Demand

2021-22 U.S. Corn Outlook

U.S. Planted Acres

Supply and demand for the new crop year begins with the supply and that begins with the number of acres we plant. USDA from their June acreage report is estimating corn acres will be 92.7 mil, beans at 87.5 mil acres, and wheat at 46.7 mil acre. All of these significantly increased from a year ago.

U.S. Planted Acres Combined

When we look at corn, beans, and wheat combined we can see just shy of 227 mil acres and up significantly from last year’s prevent plant reduced and then 2 years ago when prevent plant was even larger. We’re now approaching that maximum planted level that we had following the high prices and drought of 2012. But we also have to keep in mind that urban sprawl is eating up about .5 mil acres of corn, beans, and wheat ground. Some people say if you combine hay and other crops it could over 1 mil acres. But even at 0.5 mil over the last 8 years, we could be reducing our total available acres by about 4 million. This almost 27 mil acres is about maximum planted capacity and its going to be very difficult to get that number to increase next year.  

U.S. Prevented Plant Acres

One of the reasons it’ll be difficult is that our prevented plant numbers. When we look at the last 15 years, this year at 1.229 mil acres of corn, beans, and wheat prevented plant. That’s about as low as you can ever get so we’ve maximized our planted area already this past year. Again, we need to remind our viewers that we need acreage expansion and that is not going to be an easy task.

Weather

Weather is the biggest determining factor when it comes to yield.

Calculated Soil Moisture Anomaly

This map shows soil moisture as of Aug 16^th compared to normal. It’s clear to see the northern Plains and the northwestern belt has not only extremely short soil moisture but they’re in drought conditions. Quite a contract compared to back in June when we had exceptionally heavy rains and standing water in portions of MO and IL. For the most part if we arch the line over from Chicago to Kansas City, that’s about the line where we have dry soil to the north and west and pretty good conditions to the south and east.

90-Day Precipitation vs Average

The 90-day precipitation map shows that same pattern. Relatively dry, below normal precipitation over the last 90 days to the northwest and average to above in many areas south and east from that line from Chicago arching to Kansas City.

U.S. Drought Monitor: August 10, 2021

When we look at the drought monitor as of Aug 10^th it shows what you might expect. Everything north and west of a line from Chicago to KC is dry or even in drought conditions. South and east overall in pretty good shape.

U.S. Corn Crop Condition

Corn crop conditions is one of the indicators we can use to determine how the crop is doing. Early in the growing season we got corn planted and it was looking very good but dry weather has allowed the corn crop to gradually decline and our crop conditions as of this past week are at 62% G/E. That’s the lowest rating of the year and a little below average. Many of our good growing years like 2014-2018 had very good conditions. We’re not as low as 2012 or 2002 but overall, U.S. corn crop conditions are slightly below average for mid to late August.

USDA Corn Yield Estimate

The dry conditions combined with lower crop ratings and USDA’s farmer survey indicated a U.S. corn yield in last’s Aug crop report at 174.6 bpa. That was down 4.9 bpa from the trendline yield that USDA was using through the July crop report. It would not be impossible to see the corn yield maybe improve a little bit from here or decline a little bit from here. I think at this point it’s safe to say 179.5 bpa, a trendline yield may be out of reach.

U.S. Corn Yield

Our long term 45 year corn yield trend shows this year yield at 174.6 bpa would be below the long term trendline yield which would be 179.5 bpa. This year’s dryness in the northern Plains is certainly tugging yields just a little bit below trend.

U.S. Corn Production

When we take USDA’s acres and we’ll use their harvested acres of 84.5 mil and multiple that by the yield this year that USDA is projecting at 174.6 bpa and USDA is calculating a 14.75 bb. That would be the 2^nd largest crop on record for the U.S.

U.S. Corn Supply & Demand

Items that May Influence the Markets

Crude Oil

Crude oil has stabilized over the last 3 months but well above where we were in last August when we were in the $40-$43 range.

U.S. Dollar Index

The U.S. dollar index is a factor. When the dollar index is high that is not good news for exports because it makes the U.S. product higher priced. When the U.S. dollar index is lower it makes our exports more affordable for world buyers. The U.S. dollar has been in a long-term downtrend going back to early 2020. This year the dollar index has stabilized. At this point we have a stabilizing dollar and a stabilizing energy market. They are not providing any major influence at this time.

Items that May Influence the Markets Cont.

U.S. Corn Ending Stocks

This year’s corn stocks at 1.117 bb, very tight. Maybe not as small as previous years but demand is much larger so stocks to use equally tight this year. And even though next year USDA is projecting 1.242 bb, we believe that number could end up around a billion or even lower.

U.S. Soybean Ending Stocks

Soybean stocks extremely tight and next year, the second year in a row at 155 mb and just 3.5% Stocks to Use. No room for error in the U.S. soybean balance sheet next year either.

U.S. Wheat Ending Stocks

When looking at U.S. wheat stocks, they have been declining gradually for the last 3-4 years. Then a larger decrease this year and next year another large decrease, projected at 627 mb. Getting back down towards some of the lowest levels we’ve seen over the last 10-14 years.

U.S. Grain Stocks

This chart shows that fact that when we combine corn, beans, and wheat stocks together, this year we had extremely tight stocks similar to the post drought era but again, demand is stronger so stocks to use is just as tight or even tighter than back then. And unfortunately based on USDA’s number they’re projecting even lower stocks next year. We have the very strong probability of a second consecutive year of extremely tight grain stocks in the U.S. We want to point out where the stocks levels are compared to the where we were at in the 2012 post drought timeframe and that gives us a hint at what we might expect for prices.

Corn Monthly Chart

This chart is 25 years of corn prices and back in 2014-2020 we had relatively low prices from $3.00-$4.40 for 5 or 6 years. Those years had cheap prices. Those are years of surplus supply. But we also need to look back at the 2010-2013 timeframe when prices were above $5.50 for two and a half years. From late 2010 to early 2013 the market pulled back down to $5.50 just one time with prices spending a lot of time in the $5.50-$7.50 range. In other words, it wasn’t just one spike. Prices remained elevated for an extended period. And those were years of storage of U.S. corn. This year, 2021 we’re short again. Prices have been ranging between $5.50 and $7.50. Like what we saw from 2010-2013 and it looks like from USDA’s numbers we will have another year of shortages this coming year, 2022. Anything within this range if fair game. We’re not expecting prices to rally to $7 any time soon because we do have a crop that needs to be harvested. Prices could remain between $5.50-$6.00 during harvest. But by the time we get to spring prices could be well above the $6 level and whether we go to $7 or $7.50 will be based on additional weather scares. If there’s a weather scare in Brazil or a weather scare in the U.S. next spring, prices could certainly go higher. Even without a weather scare we think that by the time we get into late winter, spring, or early summer prices could spend a lot of time in the $6.00-$6.50 level. And as we mentioned, weather will determine if we can go higher from there. Under the current tight supply or shortage situation, price below $5.50 likely not to last very long or go very deep with current prices at $5.60 today, at the lower end of the expected range going into next year’s growing season.

To return to the previous page on your mobile device, click the back arrow in the bottom tool bar.

To zoom in on a phone, tablet, or touch screen, place two fingers on screen and move them apart. To zoom out pinch fingers together.

Format for Today’s Special Corn Outlook

2020-21 Corn Demand Outlook

Demand for U.S. Corn 2020-21

This diagram shows that feed and residual is the largest use for U.S. corn. Ethanol is a close 2^nd while exports are a distant third with and then food and industrial use less than 10% of total corn use in the U.S. Just a fraction of the U.S. corn crop goes back into seed.

Potential Feed Demand

Weekly U.S. Ethanol Production

The 2^nd largest demand category in the U.S. is corn use for ethanol. Coronavirus and the pandemic caused ethanol production to drop by nearly 50% in early 2020 as lockdowns and lack of driving and transporting along with commuting to work and school caused our fuel consumption to drop dramatically and therefore ethanol production was reduced as well. As of the last month or two, ethanol production has ramped back up to the pre-covid era and solid demand from ethanol is expected going forward. It’s worth noting that USDA is projecting the U.S. will use over 5 bb of corn ethanol. That’s about a third of all the corn produced in the U.S.

U.S. Corn Exports

China became a big buyer of U.S. corn this year and that has pushed our exports to new records at 2.850 bb of corn that will be exported from the U.S. prior to the end of August.

Total U.S. Corn Use

Solid feed demand, solid ethanol demand, and record exports resulting in an all-time record amount of corn use in the U.S. estimated this year as just of 15 bb.

U.S. Corn Supply & Demand

U.S. Corn Stocks and S/U

This chart shows the monthly ending stocks from USDA. On the right is the stocks to use. Just a little over a year ago in May and June of last year, USDA was projecting we’d have over 3 bb of stocks this year but a combination of lower production and tremendous demand, out stocks now at 1.082 bb. Very tight, near minimum pipeline levels. Until this year, the lowest stocks we’ve seen over the previous 6 years is about 1.55bb for any given month. This year at 1.082 bb exceptionally tight. Next year USDA is projecting 1.432 bb. That is an increase from this year but we believe very strong demand is going to chip away at that and by the time we get into the Jan, Feb, Mar, and Apr timeframe our stocks next year could be just as tight as they are this year. Stocks to use at 7.2% is much tighter than we’ve been at any time over the past 7 years. Next year, even though USDA is projecting it to be a little bit higher but still exceptionally tight. Again we think this number will work down towards a similar level as our current level by the time we get to late winter or early spring.

U.S. Corn Ending Stocks

Looking at ending stocks over the last 18-20 years, this year’s stocks at 1.082 bb. That’s very close to some of the lowest numbers we’ve had over the past 18-20 years. And when we include the fact that our demand is much larger than it was years ago, stocks to use are near record low. It’s these tight stocks and extremely tight stocks to use ratio that resulted in old crop corn going over $7/bu earlier this summer.

2021-22 U.S. Corn Outlook

U.S. Planted Acres

This year corn acres were up to 92.6 mil acres, beans up to 87.5 mil acres and wheat up to 46.7 mil acres. Significant increase in corn, beans, and wheat acres this year.

U.S. Planted Acres Combined

Combining corn, beans, and wheat we get 227 mil acres. That’s very near the levels we saw in the 2012-18 timeframe before we and tremendous prevented plant in 2019 and 2020.You may think our acreage could have been even higher but keep in mind urban sprawl accounts for at least 0.5 mil acres of prime growing acres per year. Therefore, over the past 8 years we’ve likely lost about 4 mil acres of prime crop ground. When we look at the difference between this year at 227 mil and last year at 218 mil, that’s an increase of 8.7 mil acres.  Where did those acres come from?

U.S. Prevented Plant Acres

The biggest item is prevented plant. Corn, beans, and wheat prevented plant was 8.9 mil acres. We’re projecting it could be 2.4 mil acres this year. That’s an increase of 6.5 mil acres. That’s the lion’s share of the acres we gained in the spring planting season.

CRP Acres

We also gained a million acres coming out of CRP. Last year CRP was 21.9 mil acres. This year the CRP acres were 20.8 mil acres. Less acres in CRP means more acres getting planted to crops. The combination of acres that did not go to prevented plant this year combined with some acres that came out of CRP accounts for the vast majority of this year’s increase in acreage.

Double Crop Soybean Acres %

Another thing that can cause an increase in acres is double plant soybeans because you don’t need additional land, you just plant the same ground twice. High prices during the spring planting season in late April, soybeans were averaging about $13.41/bu versus the previous 2 years at $8.50-$9.00/bu. We felt that double crop bean acres could have increased significantly by maybe 3 mil acres this year but in the acreage report produced on June 30^th, USDA said that double crop soybeans were 5% of the total, the same as last year. That was somewhat of a surprise to use but nonetheless that was USDA’s number that was reported in late June. One piece of the supply puzzle is acreage. The other piece is of the supply puzzle is final yield and that is primarily determined by weather.  

Weather

This year we have severe dryness in the northwestern belt and northern Plains while flooding is taking place in MO, IL, and even portions of IN and MI.

Calculated Soil Moisture Anomaly

Our soil moisture anomaly, soil moisture compared to average, shows very large soil moisture deficit in the northwestern belt and northern Plains. While soil moisture surpluses in MO and IL where they are having issues with flooding.

90-Day Precipitation vs Average

This year’s growing season has been marked by extreme dryness in portions of the western, northwestern, and northern Plains. This map shows the 90 day precipitation compared to average. If you draw a line from Chicago to KC, north and west of that line we’ve seen significant dryness. Severe drought in the Dakota’s and portions of MN already causing severe stress and limiting yield potential. IA, although they’ve had less than normal rain, they’ve had some very timely rain that makes IA still somewhat of a question mark as to whether or not they can produce trendline yields. On the other side of that line from Chicago to KC is MO and IL where they’ve had some issues with extreme wetness and flooding for much of the summer.

U.S. Drought Monitor: July 13, 2021

You can see the dryness on the most recent drought monitor. This is data as of July 13^th and was released on the 15^th. You can see the severe drought conditions in the northern Plains and northwestern Midwest and that extends into the durum and white wheat areas of the Pacific northwestern where the crop is being ravaged by drought conditions and extreme heat. But it’s clear to see that same line, from Chicago to KC south and east of that no issue with a shortage of moisture.

6-10 and 8-14 Day Forecast

As we look at the forecast going ahead, the 6-10 and 8-14 day forecasts show above normal temperatures for the entire U.S. corn and bean belt, all the way through August 2^nd. In addition to above normal temperatures during the hottest time of the year, the NWS is also predicting dryness with below normal precipitation for the entire U.S. corn and bean belt over the next two weeks. This combination of above normal temperatures and below normal precipitation needs to be monitored very carefully because there is no room for yield loss in this year’s crop.

U.S. Corn Yield

This chart shows the corn yield over the past 45 years. USDA is projecting corn yield at trend. That’s the dark red line at 179.5 bpa. But that trendline yield would also be an all-time record. The record yield was produced 4 years ago at 176.6 bpa. It’s worth noting on this chart that in 2014, 15, 16, 17, and 18 we had above trend yields 5 years in a row. Now the previous 2 years we had below trend yields and this year, if the weather doesn’t turn much more favorable we could be sitting on a 3^rd consecutive year of trendline yield.

USDA Corn Yield Estimate

This chart shows USDA’s yield estimate on a monthly basis therefore if we look at this year, USDA in the March outlook meeting projecting a trendline yield of 179.5 bpa and USDA used that yield in May, June, and July. USDA is still using a trendline yield of 179.5 bpa. USDA rarely changes the yield in July because it’s too early to have a good feel for final yields. Although 2 years ago in 2019 because of extremely late planting and flooding and tremendous prevent plant UDSA did lower the yield in the June report. Bottom line, USDA is projecting a yield of 179.5 bpa. That would be a record. There were a couple occasions that USDA was projecting yields over 180 bpa, 2018 and 2020. If the weather does not turn much more favorable or if the hot dry weather does verify over the next few weeks, it’s possible our yields could be falling in Aug or Sep this year if the weather doesn’t cooperate.

U.S. Corn Production

If we multiply this year’s yield at 179.5 bpa times the harvested areas of 84.5 mil acres, that gives us a production of 15.165 bb. That would be an all-time record large corn crop in the U.S. and yet we’re still going to be on the verge of running out of supply. It’s amazing to think this year’s crop, if the USDA is correct, is a billion bu larger than last years crop and we’re still going to be on the boarder line of running out of corn supplies.

U.S. Corn Supply & Demand

Items that May Influence the Markets

Items that May Influence the Markets Cont.

Daily Case and Daily Deaths of Covid-19

We mentioned that Covid still needs to be monitored. On the left are the global numbers. There’s a new surge in global cases but they’re not as high as previous outbreaks. Good news is that deaths, although they bounced a little bit but are still trendline lower. Even though Covid isn’t over we believe the global economy will be back into a steady growth mode. Here in the U.S. we’re seeing a secondary surge in covid cases and a lot of that is due to the variants like the Delta variant. But we’re still on a fairly steep downtrend on the long haul and deaths in the U.S. continue to work lower which is good news and also evidence that we’re not likely to see a repeat of the coronavirus outbreak that we saw a little over a year ago.

Crude Oil

We mentioned that crude oil prices are likely to remain firm. They’re in a long-term steady uptrend. We have seen a sharp break recently with crude oil falling about $11/barrel over the last couple of weeks but we believe this is just a pullback and the overall long term trend is likely to continue working higher all they way into next year.

U.S. Dollar Index

The U.S. dollar index gives us an idea of how competitive we are from a currency perspective when it comes to grain exports. A low U.S. dollar means our products are relatively cheap for foreign buyers. Now we have rallied over the last month or so but we’re still fairly cheap for the U.S. dollar compared to a year ago. This is overall good news for exports as long the dollar doesn’t continue to rise and we don’t think so with the amount of money being printed in the U.S. Once the Covid variance starts to back off we believe investors will start to gain confidence in other foreign economies and start to invest in foreign currency and that could cause the U.S. dollar to start breaking down in the months to come.

U.S. Soybean Ending Stocks

We mentioned that soybean stocks are extremely tight, this year at 135 mb. That’s near record low and even though we may have been lower in 2014, demand was lower and stocks to use are at a record lower and is going to be just about as low next year. That’s provided we can get trendline yields which is a big question mark at this time. Bottom line, soybeans are going to be a supportive item for corn and not a negative.

U.S. Wheat Ending Stocks

U.S. wheat ending stocks have been falling consistently for the last 5 years but they were still adequate this year at 844 mb. But a devastating drought in the U.S. northern Plains and Pacific northwest has stocks down to 665 mb and that number could still slip lower so wheat could be much more of a supportive item next year.

U.S. Corn Stocks and S/U

Monthly corn ending stocks and again, 1.082 bb projected for this year and 1.432 bb projected for next year with stocks to use at near record tight levels.

U.S. Corn Ending Stocks

On a longer term chart you can see those tight stocks, 1.082 bb and although it may not be the tightest stocks level, it is one of the tightest stocks to use levels we’ve seen over the past 20 years. Next year, USDA projecting an increase in stocks but demand is likely going to eat away at that and we’re likely to end up with something closer to this year. The bottom line is that if demand does in fact chew away at stocks or if U.S. yields cannot reach trendline, we’re looking at a stocks scenario next year that is just as tight as this year

Corn Monthly Chart

Back in the period of Dec 2010 to July 2013 the vast majority of the time prices traded between $6.00-$7.50. We did go above $7.50 a couple of times and peaked below $6 a couple of times, but the majority of the time was spent between $6.00-$7.50. This year we had prices up in the $7.50-$7.75 range due to extremely tight stocks. And if we’re correct that next year we could have stocks just as tight this year, we expect to spend a lot of time between $6-$7 over the next 8-12 months. We do believe the high prices we’ve seen this year are not just a blip on a chart, that we could remain at relatively higher prices for an extended period of time until the marketplace is confident that the U.S. can begin to rebuild stocks and that does not look to happen in the next 6-12 months. With that discussion in mind our current prices as of today, July 20^th, at $5.71 for new crop Dec corn we believe that is below what we expect to be traded over the next 6-12 months.

To return to the previous page on your mobile device, click the back arrow in the bottom tool bar.