Corn Market Volatility: Farmers Urged to Act Now Amid Tighter Supplies

The corn market is experiencing a volatile time, with prices rallying due to various factors such as political unrest in the Middle East and changing Chinese grain demand. According to Luke Williams, an ag risk management advisor at Advance Trading Inc., the U.S. corn yield estimate of 173.2 bushels per acre by Pro Farmer is 7% below last year's USDA final yield of 186.5 bpa. However, this number is in line with what scouts consistently found across each state they sampled.

Williams notes that historically, the USDA has posted a final average yield 3 to 4 bpa higher than Pro Farmer, so using a 177 bpa as the average U.S. yield leaves a realistic scenario of a sub-1.5 billion-bushel carryout. This would result in stocks-to-use around 8% to 9%, similar to the last time the U.S. was that tight in 2021-22.

During those years, corn prices were worth around $6 or so. Williams advises farmers not to wait for higher prices and to take action now using marketing tools such as put options to protect downside while still participating in upside if it happens. He emphasizes the importance of being flexible and keeping some upside potential.