US Corn Crop Shrinks Amid Strong Demand and Low Stockpiles
The September supply and demand report from the USDA has sent shockwaves through the corn market. The US corn crop is shrinking, with estimates reduced by 200 million bushels, according to Arlan Suderman, chief marketing economist at StoneX Group. This comes as no surprise, given strong demand on both the export and ethanol sides.
Suderman believes that USDA's reduction in feed use was an 'oversized cut', citing that it acknowledges they were too high initially. He also notes that consumption can help sustain higher corn prices but warns of a possible correction due to the recent sharp rally.
The USDA has lowered its estimate of corn ending stocks to 9.7% of expected use, leaving less room for error in the supply chain. Suderman points out that markets typically become uncomfortable when the stocks-to-use ratio falls below 10%, indicating potential volatility ahead.