Wet weather helps and hurts corn supply

In last week’s June WASDE report, the USDA decreased projected corn yields from 158.0 to 156.5 bushels per acre and dropped its 2012–2013 corn output estimate from 14.14 to 14.01 million bushels. But 14 million bushels would still be a record high, and the USDA remains committed to a big crop forecast despite a cool wet spring that has inhibited planting. The reasoning is that while wet weather will reduce planted acreage for both corn and spring wheat it will also support crop development for those areas already planted.

Very tight old-crop corn supplies continue to support prices. Corn futures dropped from $6.66 to $6.43 last week before recovering to $6.55 on Friday. Post-harvest, new-crop December futures are at $5.33 and forward contracts for 2014 are averaging $5.50. Those numbers are at a significant premium to the USDA’s 2013–2014 corn forecast of $4.90.