The grain market is still bearish despite the heavy rainfall in some areas this summer, which has put farmers on the short side of the market. Meanwhile, crop ratings are expected to sharply decline since rain where it is needed is nonexistent. Drought conditions in the eastern corn belt remain unresolved. Bigger drought conditions are still present in the central parts of Illinois and Missouri, and Brazil is predicted to have a huge second crop, causing further market pressure.
As farmers predicted over a year ago, we may see food shortages as the crops continue to struggle. Bulls in the market continue to ignore the danger, leaving us to wait for a clear picture of the situation. Production rebounded slightly last week but is still below the USDA usage forecast of 5.250 billion bushels. There were 101 million bushels of corn used in production or 14.37 million bushels per day. Year-to-date, 3.774 billion were used, which amounted to an annualized pace of 5.140 billion. The month’s data showed 416 million bushels of corn used for ethanol production on April 23, bringing year-to-date consumption to 3.40 billion bushels, down by 4.5% from last year.
As we wait for the drought forecasts, we are anticipating next Friday’s WASDE report on corn used for ethanol. There have been no trades or open interests in ethanol futures.
