Dr. Ken Rietz
Corn is the largest food crop in the US, in terms of amount grown, consumed, and exported. So, it is important to follow how it is doing. This year, the size of the harvest looks to be larger than usual, and the quality of the corn is even better than usual. Of course, there are variations from one place to another, and the weather is not guaranteed, but the outlook is better than any of the past 5 years. Here is a graph of the CBOT front-month corn futures for the past 5 years.
Figure 1: CBOT front-month futures
The low futures prices are indicative of the larger anticipated harvests. And if you want an indication of the quality of the corn crop, here are two graphs from the USDA, the first one covering the past 5 years.
Figure 2: USDA values for the past 5 years
It is clear from these graphs that the expected quality of the crop is improving, and that is on top of a larger harvest.
Not the entire Corn Belt is doing as well: some are better and some are not as good. For example, Missouri is doing even better than average. The top two highest-producing corn states are Iowa and Illinois, and they are both ahead of their usual crop progress. On the other hand, North Carolina, Wisconsin, Kentucky, Ohio, and Pennsylvania are behind their usual schedule.
In particular, North Dakota suffered from excessive rain and cooler-than-usual temperatures during the planting time, which delayed getting the corn planted, and fields still are suffering from that delay. Additionally, corn is susceptible to a variety of diseases. As usual, the main diseases are Northern corn leaf blight, tar spot, and grey leaf spot. Diseases this year are more widespread than the past two years. This is because the past two years had cool and dry June weather, and this year, June was quite hot and wet. When the corn leaves stay wet, these soil-based diseases are more liable to appear. But the net effect is too small to reduce the harvest much this year.
How does this affect trading? The extra-large harvest is causing the futures to drop, but it is hard to tell how much corn will end up getting stored if the price gets too low. Overall, do not expect futures to go up very much; a downward movement is more likely. And, of course, weather can have a large impact on futures prices, so keep that in mind.