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Even those who don't grow corn may find this analysis well worth their time. Using a couple of cliches, there is a reason it is nicknamed "King Corn" as a "rising tide lifts all boats." Not only would it be important for the corn market and related participants should the seasonal low already be in place, but everything from barley and oats to wheat would be impacted. It may even help the oilseed markets psychologically.

Beginning at the end, both supply and demand developments lean in that direction with market participants taking note, contributing to a $.30/bushel bounce off the low set following the bearish USDA yield and production estimates on Aug. 12.

From the supply side, August has not been kind to the Corn Belt south and east of Iowa, with many areas experiencing one of the driest Augusts -- if not the driest -- in the past 133 years of record keeping. Not only does that hurt soybean yields due to small seed size, but it can also take the top off corn yield potential. That fact has not been lost in crop condition ratings, with 17% of Illinois corn rated poor to very poor. Indiana is not far behind at 11% poor to very poor, Ohio at 10% and Michigan reporting 12%. Even Kansas and Colorado are showing 13% poor to very poor, despite most of the Western Corn Belt states doing much better.

In the "have" states that received so much rain all summer, it became a problem with disease; southern rust outbreaks are expected to reduce yields significantly in unsprayed fields, with even protected crops expected to suffer yield losses. The extent of this is still being hotly debated.

It is well worth noting how similar the 2025 crop year is to 2020. Extreme early-season optimism with record yields projected thanks to models based on satellite imagery, only to see disappointing yields and production in the final summary. That year, an intense derecho did significant damage and was assigned much of the blame. But high overnight low temperatures also caused pollination and tip back issues that hurt final yield. Just like this year. Also of interest is the fact that in 2020, the seasonal low was set on Aug. 4, with this year having it fall on Aug. 12 -- should it hold. Over the past decade, it has otherwise been set from late August to January the following year, depending on how burdensome supplies ended up being.

As a brief history lesson, going into the August 2020 WASDE report, the trade was looking for a yield estimate of 180.5 bushels per acre (bpa), even though the previous record was 176.6 bpa and the USDA trendline assumption was 178.5 bpa. USDA came out with an August estimate of 181.8 bpa. The final yield -- not acknowledged until the January summary, I might add -- was only 171.4 bpa. With that, recent history suggests relying too heavily on the exact same satellite imagery models amid very warm overnight low temperatures and drought and disease pressures may lead to eventual disappointing supplies.

It is a good thing the crop will be extremely large, regardless of a record yield or not, given the size of the acres eventually planted. When final revisions were released in August, it turned out 97.3 million acres had been planted, up sharply from 90.6 million last year. That also suggests more marginal land would have been included, making a record-high national yield more difficult to achieve. The "good thing" part is that USDA lowered 2024-25 ending stocks to a tight 1.305 billion bushels (bb) thanks to increased old-crop exports in its August update. That obviously lowers 2025-26 beginning stocks and total supplies.

Looking at the demand side, nothing cures low prices like low prices, and extremely strong new-crop export sales are an example of that in practice. The problem is that even though the low prices put U.S. corn on sale, encouraging the exceptional interest by global importing countries, it did nothing to encourage farmer sales. It is becoming widely accepted that exporters are very short corn in the cash market and will have to entice farmers to sell aggressively off the combine. The only way to do that is by price, of course. For skeptics out there, they would surely be long futures as a hedge against their short cash position, which they would cover once cash corn is purchased. This type of setup can lead to an atypical price rally through harvest.

It's worth noting USDA is currently assuming exports will set a record in 2025-26 at 2.875 bb compared to the 2024-25 record-setting estimate of 2.82 bb. The fact that new-crop sales are already 368 million bushels (mb) ahead of last year's pace when they are only expected to end 55 mb ahead of last year highlights just how strong they currently are.

Back to being a good thing, the crop will be large regardless of record yields or not. In its August update, USDA estimated corn ending stocks for 2025-26 will be 2.117 bb based on the 188.8 bpa yield estimate. Should it come in at trendline yield of 181.0 bpa (that was used prior to the August update), it would take 692 mb off production and ending stocks -- all else equal. That would take ending stocks down to 1.425 bb, a relatively tight level. Should yield end up matching last year's record at 179.3 bpa, it would take 842 mb off production and result in demand rationing from current assumptions.

As hinted at earlier, this analysis has not been lost on market participants. Over the two-week period from Aug. 11 to Aug. 25, managed money traders and commodity index traders were net buyers of 97,933 contracts or 490 mb of corn. As a group, they tend to be the skeptical ones, using a false production scare to sell into, so the fact that they are buying suggests they are concerned as well.

Time (and combines rolling) will tell, but the many indications that the seasonal low may be behind us should be kept in mind during marketing strategy updates.

I welcome feedback along with any suggestions for future blogs. My daily comments can be found in Plains, Prairies Opening Comments and Plains, Prairies Quick Takes on DTN products.

Mitch Miller can be reached at mitchmiller.dtn@gmail.com

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