Market Analysis

Despite this year’s coronavirus economic impact, US corn demand appears to have held its overall fall demand similar to the past two years. The mix is different with corn’s export demand bouncing back from last year’s 7 lows while ethanol’s FSI demand was only modestly lower despite a major portion of the US workforce working from their homes. Corn’s feed demand was boasted by reduced DDG output and Chinese export demand for US sorghum, but a calmer spring planting period vs 2019 likely reduced meat producers desire for fall feed coverage.

2020’s 1st quarter US ethanol output averaged 94.7% of last year. With Chinese export demand hyping sorghum prices & reduced quality 2019 corn being used in last fall’s ethanol grind, corn’s FSI demand is expected to be 1.58 billion near last summer’s level. Given the pandemic, last fall’s 48 million bu. decline vs. 2019 seems very modest.

After last year’s extremely low 270 million US corn exports, overseas demand & shipments have rebounded. US corn shipments are expected to be 445 million bu. (a 65% recovery from 2019). This is good start. However, US ex-port weekly shipments need to average 59.7 million bu. to reach the USDA’s 2.65 billion bu. forecast. With soybean shipments seasonally declining, this pace is possible, but it needs to begin shortly. La Nina’s impact on Argentina’s current corn crop (dryness) and Brazil’s safrina (2nd crop) corn output in Mato Grasso after soybeans will also be major factors in corn’s 2021 export outlook.

Last fall’s cattle feedlot and market hog numbers were similar to 2019’s levels. However, the higher weight of the animals and the reduced available supply of sorghum and DDGs (ethanol by-product) suggest more corn was fed. The big difference between 2019 and 2020 feed demand involves the reduced perceived need for feed coverage without 2019’s flooding issues. This suggests a 2.5 billion feed use vs 2019’s 2.634 billion level. Overall, this year’s Dec 1 corn stocks are likely at 11.91 billion bu., up 583 million from 2019, but lower than the 3 previous years’ stocks.

(Click on image to enlarge)

What’s Ahead

The market’s recent price reaction to S. America’s weather issues has been impressive. However, with the US December corn stocks likely rising & the limited opportunity for January’s 20/21 stocks to drop except through a smaller final crop, the corn market appears ahead of itself. Be sure to have old crop sales at 80% and new-crop pricing at 20% with fall prices at $4.00 or more at current prices.