Market News & Headlines >> USDA Crop, Carryout Cuts Stun Corn Market
USDA on Tuesday morning shocked the corn market by slashing 324 million bushels off its estimate of 2020 U.S. crop production and chopping 150 million bushels off its forecast for 2020-21 U.S. corn ending stocks, pointing to the tightest supply/demand situation in eight years.
The 2020-crop corn futures contracts soared their 25-cent daily price limits in reaction to the news and the rally continued on Wednesday with March 2021 futures reaching the highest level for a nearby corn contract since July 2013.
USDA’s annual Crop Summary report pegged 2020 U.S. corn production at 14.182 billion bushels, down from USDA’s previous estimate of 14.507 billion and below trade expectations that averaged 14.470 billion bushels in a range from 14.319-14.997 billion. USDA lowered its U.S. average corn yield estimate by 3.3 bushels per acre to 172.0 bushels and trimmed harvested acres by another 60,000 to 82.47 million.
In addition to cutting last year’s crop size, USDA revised 2019-20 corn ending stocks downward by 76 million bushels, raising last year’s estimated feed/residual use in its monthly supply/demand report.
USDA’s quarterly Grain Stocks report pegged Dec. 1 U.S. corn stocks at 11.322 billion bushels, a whopping 629 million bushels or 5.3% below the average of trade estimates at 11.951 billion bushels and slightly below the year-earlier stocks of 11.327 billion bushels.
As a result of tighter supplies, USDA cut its forecast for 2020-21 U.S. corn usage by 250 million bushels, trimming projected exports by 100 million bushels, corn-for-ethanol use by 100 million and feed/residual use by 50 million bushels.
Despite those cuts to usage, USDA’s forecast 2020-21 corn ending stocks/use ratio at 10.6% is the lowest since 2013/14, when the U.S. on-farm price of corn averaged $4.46 per bushel. USDA raised its 2020/21 on-farm price forecast by 20 cents to $4.20 on Tuesday.