LUBBOCK, TX – The difference between corn below $5 and corn above it may come down to how many days of supply are left at the end of the marketing year.
Texas A&M AgriLife Extension grain marketing economist Mark Welch says 40 days of use has become an important dividing line for corn prices. When ending stocks fall below that level, history shows a much greater likelihood of $5 corn or better.
USDA moved across that line this fall. Its September supply estimates represented about 35 days of corn use on hand. The October World Agricultural Supply and Demand Estimates pushed that figure to roughly 41 days.
The change followed two major additions to the corn balance sheet. September grain stocks came in about 200 million bushels above expectations, and USDA later increased its corn yield estimate by roughly two bushels per acre.
Welch says days of use converts the traditional stocks-to-use ratio into a simpler measure – how long remaining corn supplies would last at the current rate of consumption. With the United States still the world’s largest corn producer, user and exporter, that number remains especially important to price direction.
Farm-Level Takeaway: Getting corn supplies back below roughly 40 days of use could be a key step toward restoring $5 or better pricing opportunities.