Here’s a question from a client outside Saskatoon:
Over the years I have heard FarmLink mention that “Corn is King” and that U.S. corn is one of the key variables in determining price prospects. Is this still the case?
Neil Townsend, our chief market analyst, examines the role U.S. corn plays in a global context.
FarmLink is a true believer that the U.S. corn supply/demand balance sheet plays a vital role in determining the structure of global grain and oilseed prices. U.S. corn is essentially the residual in the global supply/demand balance. What does that mean? The world’s job is to strive to be self-sufficient, but U.S. corn (as well as wheat and soybeans) is there to cover all shortfalls. The U.S. has storage capacity, the river/rail system, and the deep-water ports to get product out to the world.
Over the years, the U.S. farmer was too good at his/her job. U.S. farm policy consistently dealt with surplus. Finally, in the early years of this century, they hit ethanol. The impact was remarkable. Surplus dwindled to fumes. The broader world was incentivized to produce more corn. The U.S. has lost some of its dominance as Ukraine and Brazil have taken away export market share. Fast forward to today, and the U.S. is on the verge of a 16 billion bushels corn crop and a 3+ billion bushels carryout. All other things equal, this surplus will limit grains and oilseeds price potential.
FarmLink clients heard it first! Get impactful grain marketing advice you can trust. Try our recommendations for one month. Sign up below.