Inside The Market

Everybody Talks, But ...

There’s an old saying, “Everybody talks about the weather, but nobody does anything about it.” I was reminded of it as I wrote this column about the U.S. corn stocks’ conundrum, rewording it to, “Everybody talks about burdensome corn stocks, but nobody does anything about it.”

The last five marketing years have seen domestic corn ending stocks climb from 821 million bushels as the three-year drought from 2010 to 2012 ended to 2.295 billion bushels at the end of 2016–2017 (August 2017). Production in 2017–2018 hit 14.604 billion bushels, USDA estimated this past January. That production mark ranks only second to the 2016 growing season when the total was reported to reach 15.148 billion bushels.

Reduced Production. Some of this reduction was due to fewer acres planted. The last five marketing years have seen the DTN National Corn Index (NCI, national average cash price) post 12-month averages of $6.92 (2012–2013), $4.20 (2013–2014), $3.48 (2014–2015), $3.41 (2015–2016) and $3.21 (2016–2017). The 2017–2018 average for the NCI was at $3.22 as of this writing, helped by a spring rally tied to weather problems in South America. But, if it weren’t for the dry weather in Argentina during the course of the South American summer (North American winter), where would cash corn be priced now because of the continued growth of U.S. ending stocks? $3? $2.50? Lower?

Sharp Move Up. Following USDA’s “Quarterly Stocks” report at the end of March, I projected total demand for U.S. supplies of 14.284 billion bushels, putting ending stocks at 2.663 billion bushels. The latter would be the highest carryover number in almost 30 years, producing stocks-to-use of 18.6%. The previous year’s 15.7% would pale by comparison. If U.S. ending stocks had ended above the 2.6-billion-bushel mark, the NCI would be expected to average near $2.40. Its lingering effects would ripple across marketing for years to come.

Farm Response. What has the response by U.S. farmers been to the continued growth of corn stocks? Well, as my paraphrased quote suggests, there’s been a lot of talk but little action. With 2018 planted acres still an unknown number, it’s worth noting that the previous seven years saw U.S. corn-planted area average 92.5 million acres. The seven years before that, corn-planted area averaged 85 million acres.

But, it isn’t just the acres planted; it’s what we do with them. National average corn yield rose to an all-time high of 176.6 bushels per acre in 2017. An article published in The Progressive Farmer and on DTN this past April, “Good to Great,” talked about how one family farm in Oregon saw its corn yield improve by 100 bushels over a decade. Imagine what the change has been across the heart of the U.S. Corn Belt.

The constant push for higher yields on more acres doesn’t seem, at least to me, to be a step toward doing anything about the U.S. corn ending stocks situation.

Solutions to higher corn stocks? See page 22, “The Bio-Harvest Is Here.”

Read Darin’s marketing comments each Friday at

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