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Corn price pressured by record US harvest

The United States will be harvesting a record amount of corn this year – putting the corn price under pressure.

The US Department of Agriculture (USDA) expects US corn growers to receive an average of $ 3.10 per bushel (€ 103 per ton) for the 2020 harvest. That’s the lowest price in the US in 14 years.

The USDA expects high demand for American corn from the new crop. And analysts argue that the USDA has not yet taken into account storm damage in Iowa corn. Photo: ANP
The USDA expects high demand for American corn from the new crop. And analysts argue that the USDA has not yet taken into account storm damage in Iowa corn. Photo: ANP

The USDA released its monthly Wasde-forecast on Wednesday evening, summarising production and consumption of key agricultural commodities. Initially, corn prices dropped on the Chicago futures market. But they rose again during the trading day on Thursday. The USDA expects high demand for American corn from the new crop. And analysts argue that the USDA has not yet taken into account storm damage in Iowa corn.

Futures market
Overview of futures prices for: corn, wheat and soybean

Global supplies of corn and wheat are increasing

Globally, the USDA expects maize production of 1.171 million tons, while consumption will be 1.165 million tons. Because the harvest is higher than the consumption, the corn stocks in the world are growing. The USDA also expects an increase in stocks in the world for wheat. The harvest of 766 million tons is greater than the consumption of 750 million tons. This leads to a wheat stock of 316.8 million tonnes at the end of the 2020/2021 season. The world’s wheat supply has increased by 33 million tons in 2 years. Stock growth is causing price pressure because harvest setbacks can be absorbed by using stocks. On the futures market in Paris, the wheat quotation fell slightly on Wednesday. This loss was already made up on Thursday morning.

Record harvest is also expected for soybeans

For soybeans, the USDA also expects a record harvest for the US, as it does for corn. Global soybean production will increase to 370.4 million tons from 367.9 million tons, according to the USDA forecast. The increase in consumption is mainly due to the higher demand in China. Soy quotations rose in Chicago after the publication of the Wasde report.