Assessing the Potential for Higher Corn Prices

The odds are against four dollar cash corn this year and next, at least for any extended period of time. The monthly average cash price paid  to farmers in the United States for their corn  has been less than $4.00 a bushel for 27 consecutive months. It's likely to stay that way well into 2017, too, says University of Illinois Ag Economist Darrel Good unless something changes.
Good: “Some combination of reduction to supplies or increase in consumption will be required in order for prices to increase above $4 for an extended period of time."
On the supply side, or how much corn is around, USDA's next Crop Production report on November 9th and will contain a new forecast of the size of the 2016 U.S. corn crop. The trade is leaning toward a smaller corn yield this year. So, not a lot of supply side help expected there. That make the southern hemisphere pivotal says Good.
Good: “Brazilian production decline sharply in 2016 and early season USDA projections are for production to rebound to near the level of 2015 during the year ahead. In addition Argentina is expected to expand corn area due to reductions in export taxes.”
It is too early in the South American growing season to assess yield potential, but production well below early projections would be required to push corn prices higher says Good.