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Frequent Contributor

Let’s play it out: Corn prices fall sub-$4.50

For argument sake let’s assume production is "moderately" tapered back from earlier estimates (say to 145-155 bpa). If this ends up being the case, then it will eventually become ALL about "DEMAND." As we are aware, this could be where we struggle to gain traction. My thoughts are it all hinges on "price." Most in the industry are currently questioning the USDA's demand estimates, believing they are overly optimistic, especially the 1.3 billion bushel export estimate (high by 200 to 400 million) and the feed usage estimate. I would agree with the bears, at our current "price" the estimates simply seem too high. But if prices were to fall sub-$4.50 like many bears argue, then the USDA's "demand" estimates could be right on target. A lot will obviously hinge on China and whether or not they try and rebuild government surplus on the break. My hunch is not only will China, but other importing nations will also trying and increase supplies on any major price break sub-$4.50. Bottom-line, without some type of EXTREME production setback, you can shave 700 to 800 million bushels off "production" but still be left with a new-crop ending stocks number of over 1 billion bushels. With this being the case, prices well above $5.00 are still too high to attract enough demand to squeeze the balance sheet.

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2 Replies
Honored Advisor

Re: Let’s play it out: Corn prices fall sub-$4.50

You are assuming that all of those acres got planted......................................................


For argument's sake, let's say that only 90% of those original planned acres actually got planted............


The balance sheet would be looking a little different..........

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Senior Contributor

Re: Let’s play it out: Corn prices fall sub-$4.50

I don't think it takes sub 4.50 corn to make exports regain some traction,  I don't look for them to come back like they where though.

3 things that happened when corn got to $8,   Short US crop,,,,Short crops in Black Sea Region,,,,short crops in South America,,,,NOne of those have yet materialized for this crop,,,,,,If corn slips below $6 which is will,  then I think exports will be determined by shipping cost and quality,  The price of US corn is always some of the highest in the world,   simply becaues it has to be for us to survive out here.   that isn't going to change very soon,  at least  we all better hope it doesn't.  

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