Todd's Take

A Uniquely Bearish Possibility in Cash Corn Price History

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
Connect with Todd:
After six months of trading in 2024, the high for DTN's National Corn Index has been $4.49, 57 cents below USDA's $5.06 cost of production estimate for the prior year. Since ethanol began in 2007, 2017 has been the only calendar year in which the index did not closely reach USDA's cost of production estimate at least once, an unusually bearish situation that funds have big bets on. (DTN ProphetX chart)

I don't know why the passage of time continues to surprise me, but I'll join the older crowd and say, "My, it's hard to believe the first half of 2024 is already over." For those still holding on to old-crop corn or waiting to make a decent new-crop sale, the passage of time may feel more painful these days as the clock ticks slowly. So far in 2024, prices have not been kind to those who produce the corn the world needs. Amid severe storms and heavy rains at planting time, DTN's national index of cash corn prices reached a 2024 high of $4.49 a bushel on May 13, but could go no higher.

Local conditions vary widely, but comparing DTN's National Corn Index with USDA's estimate of production costs is how we get a general read on profitability among producers. So far in 2024, unless you farm land you already own or yielded at least 202 bushels an acre, you probably haven't covered the $907 of costs USDA says it took to produce an acre of corn in 2023. Going by the national averages, $5.06 a bushel is needed just to cover the costs of last year's production.

If there is hope for producers, it may help to know growing corn has become more consistently profitable since the ethanol industry was federally authorized in 2007. Since 2007, calendar year 2017 has been the only year in which DTN's National Corn Index did not trade within at least 1% of USDA's cost of production estimate for the prior year. This year's gap between the May 13 high of $4.49 and last year's cost of production of $5.06 makes 2024 a second possible occurrence.

A glance at USDA's corn balance sheets for 2017-18 and 2024-25 shows remarkably similar numbers. In 2017, 90.2 million acres of planted corn yielded 176.6 bushels an acre to produce a 14.61-billion-bushel (bb) crop. In June of 2024, USDA estimated 91.5 million acres of corn will yield a record 181 bushel per acre crop to produce 14.86 bb this fall. Given the unusually stormy spring of 2024 with heavy rains, wind damage, hail and flooding in June and early July, 2024 production has a good chance of coming close to or below 2017 production -- time will tell.

Further down the balance sheets, 14.80 bb of demand in 2017-18 meant that 2.29 bb of beginning corn stocks was trimmed to a 2.14-bb surplus by the end of the season, a 14.5% ending stocks-to-use ratio. In 2024-25, USDA estimated that 14.8 bb of demand will turn 2.0 bb of beginning corn stocks into a 2.10-bb surplus by the end of the season for a 14.2% ending stocks-to-use ratio. The possibility of lower production in 2024 could tighten those numbers.

If you are wondering about the planting season in 2017, it had much less drama and made quicker progress than the 2024 crop. In 2017, 91% of the corn crop was planted by May 28 versus 83% of the corn crop being planted by May 26 this year. An important difference between the two seasons is that specs were not as bearish in 2017. In 2017, noncommercials were net long 41,900 contracts as of June 27, and funds were a bearish segment of the group, holding 105,570 net shorts in corn. This time around, noncommercials in corn were net short 169,783 contracts as of June 25, bloated by funds holding a net-short position of 296,251 contracts.

The current corn market looks like a classic standoff between corn producers, digging in for better prices, and funds, trying to demoralize producers into giving up their corn cheap. If funds are able to hold prices down long enough, the ploy may work, and the subset of producers with the most strained balance sheets may have to eventually let go.

However, the season isn't over yet, and we don't typically get a good production estimate from USDA until October, when producers start to find out in the fields for themselves. Early clues may surface in the Farm Service Agency's report of prevented plantings in August, but even that won't provide a complete picture of harvestable acres or possible yields.

As usual, I cannot guarantee how prices will finish, but given the potential threat to corn production that has already happened and the level of uncertainty still ahead, it is extremely dangerous for funds to be holding this large of a net-short position in corn at a time when cash prices are 23% below USDA's cost estimate.

Also, knowing the arrival of the ethanol market has made it more difficult for cash corn prices to be held underwater for long periods of time gives hope that, somehow, producers could still see better prices before the year is over. Weather has found many ways to stress crops in early 2024, and there could still be a surprise or two ahead.

We can't say funds won't sell more corn, but funds also have limited budgets and a knack for being wrong when making big bets. 2024 may turn out to be the second time in the post-ethanol era corn prices fail to reach breakeven, but I'd like to think stubborn producers could still prevail.


Comments above are for educational purposes only and are not meant as specific trade recommendations. The buying and selling of grain or grain futures or options involve substantial risk and are not suitable for everyone.

Todd Hultman can be reached at

Follow him on social platform X @ToddHultman1

Todd Hultman