Economist says corn price rally possible, but not expecting $5/bu
An ag economist sees some potential for a post-harvest rally in corn prices, but certain things must happen first. Todd Hubbs with the University of Illinois says, “I think we’re going to need to see a pretty good drop back in corn production in this crop because we’ve got off to a pretty weak start, particularly in ethanol crush and exports.”
Hubbs says central Illinois corn prices were in the $3.80’s with some locations offering above $4.00 for fall delivery last week, but he says a strong rally depends on the ability of supply issues to overwhelm demand weakness. “Here in Illinois, we’d be talking about $4.20-$4.25 cash prices. Depending on where you’re at in the country, it would probably be a little bit lower, but we’re not talking $5.00 and I think a lot of people were hoping for that kind of scenario. I think we’d have to see a really bad crop production number to get to that kind of level.”
Hubbs says corn demand limped out of the gate this marketing year, and he’s cautious about export potential, but increased ethanol production could be a price factor since ethanol exports would likely increase under the proposed U.S. China trade agreement.
Hubbs says despite weak corn demand, ending stocks are 185 million bushels lower than last year. He says that coupled with expected lower yields and unknown damage from the winter storm that hit the western corn belt a week ago might boost prices.