Fundamentally Speaking

The surge in corn prices over the past year has been linked to below trend yields both this season and last in the U.S. along with record exports and the support of the outside markets with a lower valued dollar enhancing our overseas sales.

Also, a stronger crude oil market helping rebound ethanol production and a record run in the stock markets based on more buoyant economic activity which is supportive for the commodity markets both played a role.

The surge in our exports is certainly noteworthy as the 979 million bushel (mb) year on year gain over the 2019/2020 level, a 54% increase, is the second highest ever in both bushel and percent terms next to the recovery in the 2013/14 season figures after the 2012 drought.

Record Chinese imports helped but the U.S also benefited from an unusual circumstance where yields of corn in the main competitors which includes Argentina, Brazil, Russia, and Ukraine were below trend this past season, often by significant margins, while our yields this past season are just below trend.

This graphic shows the percent deviation from the 2000-2021 trend yield for the world and five major corn exporters as the world corn yield for the 2020/21 season came in 3.8% below the 21-year trend, the largest negative deviation from trend since the 2012/13 season.

That is when global corn yields were 7.3% below trend due primarily to the historic drought in the U.S in 2012 that cut our corn yields a huge 22.5% below trend.

Other than that, this is the second largest percent drop below trend since at least 2000.

Even in 2012, not all five major exporters had corn yields below trend with Brazil's yield 13.9% above trend.

This year is the first time since the 2010/11 season that all five exporters saw yields below trend with Brazil's 21.7% negative deviation from trend easily the lowest since 2000, as is the 19.7% drop in the Ukrainian corn yield.

Note that USDA is looking for our corn exports to fall at least 270 mb below last year's level based on world corn output up 80.6 million tonnes this season with Argentine, Brazilian, Russian, and Ukrainian production accounting for 45.3 million tonnes (1.785 billion bushels) of that as unlikely that all four once again will have below trend corn yields for the upcoming season.

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