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The 1988 and 2012 drought years again stand out. The June WASDE estimate is 2.8 bushels above the trend at 178.5 bushels per acre. Historically, more years are above the trend than below the trend (see Figure 1). In Illinois, cash prices in October are usually lower than the harvest price. a variety of reasons, including to recognize new and past website users, to customize Copyright © FactSet Research Systems Inc. All rights reserved. Two of the largest price changes occurred in the 1988 and 2012 drought years, as indicated in Figure 3. The result is a 2019 corn crop projected to total 13.7 billion bushels, which will be the smallest U.S. corn crop since 2015. Herein, we present a scenario of baseline prices that are “likely” to happen the next several years barring any unforeseen events (e.g., weather disruption). Combined with a return to trend line yields for 2020 this implies a substantial boost to U.S. and world corn supplies is likely, pushing the corn carryover up substantially and putting pressure on prices.

Still, there is a possibility of adverse weather in 2020. The trend of projected carryout has declined two consecutive months and corn prices have recovered, trending higher during the same time period.
The full extent of African Swine Fever becomes known in China and it is large. The Center for Commercial Agriculture’s Crop Basis Tool (available at purdue.edu/commercialag) indicates early December corn basis bids were running $0.20 to as much as $0.32 per bushel above the most recent 3-year aver- age across Indiana. The June WASDE estimate is 2.8 bushels above the trend at 178.5 bushels per acre.

Using settlement prices in May provides unbiased estimates of harvest prices. The harvest price is used to calculate crop insurance indemnity payments on corn in the Midwest states. – DTN Stress testing agricultural portfolios is a process that many agricultural lenders go through, partly to understand risks that their borrowers face and partly to ensure the lender themselves have adequate capital to sustain lending and continue to serve agriculture should unexpected stressful events occur. Corn yields are estimates at this point in time, and weather in July will have a large impact on actual yields. The U.S. stocks-to-use ratio is expected to come in at 13.7%, down from 14.6% last year.
International stock quotes are delayed as per exchange requirements.

Figure 2. The 1988 and 2012 drought years again stand out. Corn prices rose further to pass $4 a bushel in October, the highest since August of 2019, boosted by delayed crops in Argentina e Brazil.

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World stocks are projected to decline to 26% of total usage, down from 28% last year and well below the 33% stocks/usage ratio recorded in 2016. – DTN, https://farmdocdaily.illinois.edu/2019/08/adverse-corn-and-soybean-price-scenarios-for-2020-and-2021.html, Soybeans: Bayer Clears Major Hurdle For Rollout of XtendFlex Technology, Stephen Censky Returns as CEO of American Soybean Association, Discovery Park of America Moves Closer to Million-Dollar Goal for New Ag Innovation Exhibit, Corn And Soybean Yields: Barchart Ups Its U.S. When they occur, positive deviations are large. The U.S. economy weakens, leading to a mild recession. A series of stressful events, including U.S. recession, further export disruptions and supply/demand imbalances, was assumed in the above to create a scenario resulting in several years of sustained adverse prices. 10/16/2020 1:46 pm. Source: FactSet, Markets Diary: Data on U.S. Overview page represent trading in all U.S. markets and updates until 8 p.m. See Closing Diaries table for 4 p.m. closing data. The harvest price is based on the average of settlement prices for the same December contract throughout the month of October. Conversion Corn Price Price; 1 Bushel ≈ 35,239 Liter Corn Price Per 1 Liter 0.11 USD 1 … The 137 bushel yield is equivalent to having a 2012 drought occur in 2020. These deviations have the opposite skew as yields. All prices in this range are below the actual $3.88 projected price set during the month of February 2020, and overall all prices in this range would be viewed as low prices. Corn, Soybean Price Changes and Relative Profitability A management programs geared specifically for farmers. From 1985 to 2019, 71% of the harvest prices were below May average settlement prices.

Given that actual yields usually are above trend yields, the WASDE estimate of 178.5 bushels per acre seems reasonable. Data are provided 'as is' for informational purposes only and are not intended for trading purposes. The largest adjustments on the corn side are to assume lower harvested acres and lower yields than the August USDA WASDE. Even given those prospects, prices could go even lower causing more financial stress to develop. Sources: FactSet, Tullett Prebon, Commodities & Futures: Futures prices are delayed at least 10 minutes as per exchange requirements. Average of settlement prices of the December contract for corn on the Chicago Mercantile Exchange (CME) throughout the month of May. Actual yield was below the trend yield by 32 bushels per acre in 1988 and 38 bushels per acre in 2012. – DTN, Corn Market: In Places, A Strong Basis Ahead Of Harvest – DTN, Corn And Soybean Markets: What Accounts For Recent Price Disconnect? Corn prices rose this morning despite falling energy prices and concerns over diplomatic relations with China.

A 167 U.S. corn yield has an expected harvest price of $3.50 per bushel, a 170 bushel yield would suggest $3.39 harvest price, and so on (see Table 1).

Exports are reduced to reflect continuing trade difficulties (1,900 versus 2,050 million bushels in 2019/20, 2,350 versus 2,450 million bushels in 2021/22 and 2,400 versus 2,475 million bushels in 2021/22). View the latest Corn Dec 2020 Stock (CZ20) stock price, news, historical charts, analyst ratings and financial information from WSJ. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. The harvest price is based on the average of settlement prices for the same December contract throughout the month of October. Given that actual yields usually are above trend yields, the WASDE estimate of 178.5 bushels per acre seems reasonable. window.addEventListener("sfsi_functions_loaded", function() For a detailed statement, please see the University of Illinois Copyright Information and Policies here. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. U.S. corn production for 2020/21 is projected to be 14.722 billion bushels, according to the October World Agricultural Supply and Demand Estimates (WASDE). Also presented is an adverse set of prices, which represents an adverse event that is plausible but unlikely.

This $3.35 is used in making the projections for 2020 harvest price based on the statistical relationship described in the next section. Planning actions that would be taken if adverse conditions do result is part of good risk management. If actual yield equals the guarantee yield to set crop insurance guarantees, 85% revenue insurance policies will make indemnity payments. Grain markets close mostly lower Friday. The $3.10 is a future price, and cash prices usually would be lower. The out-years then adjust as well.
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