Harvest of the U.S. corn crop has begun. Production remains a little uncertain, with just 29 percent of this year’s crop at maturity as of Sep. 22, about two weeks behind the average pace of development. So far, it appears the weather will be good through at least the early portion of harvest, with northern regions seemingly the only area in jeopardy of an early frost.
Even additional declines to production may not be enough to offset reduced demand. In fact, USDA may not yet be showing the full effect of weaker corn exports in the 2018/19 numbers. Moreover, ethanol production continues to lag last year’s pace, with last week’s production down by about 5 percent versus 2018. Rumors abound of potential plant closings, particularly in the dry milled sector. Responsible for more than 80 percent of all U.S. ethanol production, it would only take a handful of closures to significantly pressure corn use for that category.
Adding to the hazy market outlook, Brazil is projected to produce more than 102 million metric tons of corn in the upcoming year, and South America will continue to displace demand for U.S. corn in the global market.
Market attention has shifted from uncertain supply to uncertain demand, a pendulum swinging from concern about insufficient corn production to questions of whether corn stocks will decline materially for 2019/20.