Corn futures at Chicago briefly broke through US$6.00 per bushel (AUD$304.70/t) overnight before retreating to close at 590c. We haven’t seen numbers that high since July 2013.
In 2012 the US had some serious issues with corn production and the July 2013 contract was the last old crop corn contract to roll off the board. In 2012 US corn yields averaged just 7.84t/ha, last year the US corn crop averaged 11.17t/ha. In December 2012 the USDA estimated US production at 272.43mt + carry in of 25.11mt and imports at 2.54mt, supply was estimated at a smidge over 300mt. With disappearance at 283.56mt this resulted in a stocks to use ratio of just 5.48% for US corn.
Moving the clock forward to 2021-22 and although we still don’t know how much corn the US will grow the speculation is rife. We have an idea of carry in, 38.15mt. The March 31 USDA planting intentions report has the area in at 91.1 million acres. Using average abandonment and last year’s yields, which are starting to look a little optimistic, we see production at about 375mt. This gives a total supply (no imports) of about 413mt. If we use the 2020-21 disappearance of 371.5mt this leaves just 41.65mt as carry over resulting in a stocks to use ratio of about 10.2%. So not as tight as the 2012 crop.
Let’s just reduce yields to the 10 year average of 164.5bu/ac. This gives us a potential production number of about 346.45mt. Which in turn, leaving demand as is, gives us an ending stocks to use ratio of just 3.54%. To see the 2021-22 stocks to use ratio at the 2012-13 level production estimates would need to be about 354.3mt. This isn’t taking any additional demand (smaller carry in) into account.