Corn Market Update

Corn supplies remain tight, but the market may not need higher prices to ration what's left of last year's crop. That's according to Joe Janzen, University of Illinois professor who studies price and trading dynamics in agricultural commodity markets. He says that despite USDA lowering last year's production estimate, demand has stayed strong through the first half of this year, still with Brazil's bumper fall corn crop now coming in, Janzen says that the market is confident it can make it through September.

“We're in a situation when we get down to the end of the marketing year, things can get kind of highly variable, because, just because of, you know, there's this very like temporary short-term imbalance between maybe supply and demand in particular locations and at specific moments in time.”

Meanwhile, futures markets do not need to be moved higher to ensure enough is available, leaving it up to cash markets to pull corn from reluctant sellers. Iowa State University economist Chad Hart states that farmers must watch local basis and decide how to allocate available storage space.

“I'm fascinated by, let's call it the strange trade that we're in. The idea is we're continuing to see export pace on old crop look really good. Will that translate for us as we're looking for new crop? Because we're going to need that international boost to work through these larger crops we think we're bringing in this fall.”