Corn harvested last fall is, and has been, in short supply for quite some time. It’s the reason the price of the commodity has gone so very high, at least until recently. The price of corn, old and new, has been declining in Chicago. University of Illinois Ag Economist Darrel Good explains where the downward pressure is coming from:
“Well, only most of the pressure has been in old crop prices, and I really think that some of the liquidation that we’ve seen is in reaction to what many are saying is a mini-macro meltdown here. China’s tightening its economic situation; there’s really concern about economic performance in the US; we saw unemployment claims jump again this past week or so.. and we’ve seen a pretty weak export demand for corn in recent weeks.”
Both shipments and new sales of corn have lagged. The Illinois ag economist says it all has many in the trade expecting the USDA May World Agricultural Supply and Demand Estimates report to show a smaller export figure, and a bigger end of the year carry out stocks number:
“So, they’ve kind of taken the attitude that rationing has been accomplished on old crop, we’ve seen some decline on consumption. And so, the weakness really started in old crop corn, now, recently has spilled more over into new crop, although that spread between July and December has narrowed up quite a bit. But, I think there is growing thinking that more of the crop will be planted in a timely fashion this year than what the market thought just a week ago.”
It is pretty clear that the western Corn Belt will get most of the crop planted in a timely fashion. The eastern Corn Belt, on the other hand is a different story:
“And that has some significant impacts for yield expectations on a national basis that we’ll have to own up to at some point.”
Darrel Good says it remains to be seen how much of an impact the delay will have on this year’s yields and consequently the total number of bushels harvested in the U.S. this fall.