In the past 43 years, we seen the stocks/usage ratio below 10% only six times. If we assume a 1 million acre loss to 89 million acres planted this season, and use a yield which is down 2.5% below trend, ending stocks would come in near 1.418 billion bushels with a 9.9% stock usage ratio. A 5% drop in the yield to 162.2, would leave ending stocks at 1.076 billion bushels which is down from the current USDA estimate 2.11 billion bushels and down from 2.295 billion this year. Beneficial rains are forecast later this week for a large portion of the Midwest which should ease the early stress in the corn crop and this helped to drive the market lower yesterday. Forecasts for June 12-19 have 1.5 to 2.5 inches for 80% of the Midwest. There continues to be disagreement in the various forecasting models with the EU model drier than the GFS models. December corn extended lower with the expectation of beneficial rains and cooler temps later this week. Models are in disagreement, though, and flip flopping forecasts are always a trader’s nightmare. Keep 413 and 447 as upside targets.
Dec ’17 Corn Daily Chart