A look at the market

mark welch TAMU
Dr. Mark Welch
Extension Economist – Grain Marketing in the Department of Agricultural Economics
Texas A&M Univresity

The U.S. Department of Agriculture revised the corn production forecast after the devastating derecho storm across Midwest. Corn production for grain is now estimated at 14.9 billion bushels, down 2% from the previous forecast, but still up 9% from 2019.

Yields are expected to average a record 178.5 bushels per harvested acre, down 3.3 bushels from the previous forecast, but up 11.1 bushels from last year. Area harvested for grain is forecast at 83.5 million acres, down 1% from the previous estimate, but up 3% from the prior year.

Texas A&M AgriLife Associate Professor and Extension Economist Mark Welch says in his newsletter “Feed Grain Outlook,” that export sales have continued strong for the year.

“Sales for mid-September were 63 million bushels, twice the pace needed to reach the marketing year target of 2.325 billion bushels. That goal is up 560 million bushels compared to corn exports in 2019-20.”

On price, Welch says the seasonal tendency of the December corn contract is to exhibit an upward price trend through the spring, peak in June and fall below the year’s average price in mid-July.

“That early season price strength is normally associated with uncertainty over acres, yield and demand prospects. Even before the current health crisis, prices were exhibiting uncharacteristic early season weakness, perhaps factoring in a large increase in corn supply for 2020.”

He notes that questions over storm damage, yield potential and acres may provide enough incentive to price more corn. “With harvest about a month away and a good handle on 2020 production levels, I am prepared to price another 10% for downside price protection through harvest.”

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