Corn Market Update

– Josh Maples, Assistant Professor & Extension Economist, Department of Agricultural Economics, Mississippi State University

Corn harvest season has started in some areas and should pick up in the major corn production areas of the U.S. over the next month or so depending on weather. There are still plenty of unknowns concerning the size of the U.S. corn crop, but information is increasing weekly. The latest Crop Progress Report shows 5 percent of the corn harvested across the 18 states in the report with most of the harvest occurring in the southern states at this early point in the harvest season.

Corn prices have dropped in recent weeks. The December corn contract closed today at $5.22 per bushel. This is down about 50 cents per bushel from mid-August and down even more from the peak back in the spring when the December contract was trading over $6 per bushel. In the graph below, weekly corn prices in the Southern Plains have also declined in recent weeks.

One reason for the lower futures prices is stronger expected yields. The latest projections in the World Agricultural Supply and Demand Estimates (WASDE) were released on September 10th and included some adjustments higher for corn yield and production. The WASDE report projected average corn yield to be 176.3 bushels per acre which is up 1.7 bushels from projections in the same report in August. For comparison, estimated average yield for the 2020/21 crop year was 172 bushels per acre. The report also included projections for higher acreage at 93.3 million acres which is up 600,000 from the August projections and would be 2.5 million more than last year.

The increased projections for acreage and yield contributed to a projected 800 million bushels increase in corn production compared to last year for a total of 15 billion bushels projected for this crop year. As a result, USDA lowered the projected average farm price for the 2021/22 crop year by 30 cents per bushel from $5.75 in the August WASDE to $5.45 in the September WASDE projections.

A large crop and potentially lower corn prices would be good news for cattle producers dealing with higher cost of gain. Corn prices are still expected to be elevated compared to previous years, but the current outlook for corn prices is not as high as it was just a few months ago.