Corn Prices Fall Despite Yield Cut, Bull Market Expected to Continue

Corn prices fell after the USDA's WASDE report on Friday, despite a yield cut to 178.5 bu. per acre. Dan Basse, president of Ag Resource Company, said that the yield figure was close to market expectations and already priced in.

The bull market for corn is expected to continue into the end of the year or longer as balance sheets tighten. With production at 15.8 billion bu., which is 1.5 billion bu. below last year's level, and record demand of 16.2 billion bu., USDA lowered ending stocks down to 1.567 billion bu.

This brings the stocks-to-use ratio below 10%, opening up the possibility for prices to rally if yield falls further or demand increases. Basse expects corn prices to reach $5.25-$5.50, but thinks they could drop as low as 176 bu. per acre due to reduced nitrogen use and extreme weather conditions.

Global corn stocks are also tightening, with a 2.56 million metric ton cut to 272.1 MMT. Basse expects further cuts in the future as the U.S. crop shrinks.