Back in June, scientists from University of Illinois and University of Ohio forecasted 2020 corn harvest prices based on May data. They predict an approximate yield of 178.5 bushels per acre, slightly higher than the forecasted 25-year average trend yield for 2020. The actual 2019 yield of 167.4 was lower than the predicted 2019 trend yield of 173.4, but 2020 yield predictions are more promising looking at historic data. Based on these estimates, they expect a harvest price of around $3.10 per bushel.
Agricultural economists from Purdue University support optimistic yield estimates. Even though farmers planted about 5 million fewer acres of corn in 2020, the increased yield may even set a production record.
Back in July, Todd Hultman, DTN Lead Analyst, had a closer look at the USDA corn harvest field estimates which predict a fall price of around $3.00. He considers these estimates to be rather conservative, since the harvest usually turns out to be higher which would then decrease prices. He does caution to focus too much on the relationship between yield and prices, though. External factors like the global pandemic and international trade policies may reduce demand and impact the regular seasonal trading patterns.
It is now the middle of September and USDA’s Crop Progress Report shows the crop in most major corn-producing states has matured much earlier compared to 2019 (see “corn dented” and “corn mature”). The corn harvest progress nationwide stands at 5% as of September 14th reports.
Between August 7th and September 17th, corn prices per bushel increased from $3.07 to $3.75. December futures stand at $3.74 as of September 17th. Corn exports at the higher range of estimates clearly encouraged traders to invest. Exports to China especially drove demand, since typhoons decimated supply overseas.
So far, the 2020 corn harvest shows high yields and increased international demand causing an unexpectedly bullish market.