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Shrinking corn crop tightens U.S. supplies as demand remains strong

The chief marketing economist with StoneX Group says corn was the standout in USDA’s September supply and demand report.

Arlan Suderman tells Brownfield the U.S. corn crop is shrinking and there’s been strong demand.

“Certainly on the export side and the ethanol side, but USDA, while they cut the size of the corn crop by 200 million bushels, they cut 150 million bushels from this year’s feed and residual use. And I think that’s an oversized cut, kind of acknowledging that they were too high in the first place.”

Suderman says it’s unclear if USDA’s feed reduction will hold. He also strong consumption can help sustain higher corn prices, but the recent sharp rally for corn could be vulnerable.

“Typically in a demand driven market, you take the escalator up, not the elevator. Here over the last few weeks, we’ve taken the elevator up. I wouldn’t be surprised at any point if we have a significant correction.

The USDA lowered its estimate of corn ending stocks to 9.7 percent of expected use.

Suderman says markets typically become uncomfortable when the stocks-to-use ratio falls below 10 percent, leaving less room for error in the corn supply.