Last week, the price of corn fell sharply after the Department of Agriculture released the September World Agriculture Supply and Demand Estimates (WASDE) report. This is a report that is closely followed by traders in the agricultural commodities market because it gives an indication of the supply and demand dynamics.
The price of corn declined from $3.65 a bushel to a low of $3.50. The declines then continued and today, it reached $3.48. This is the lowest the price has been since the end of August. The WASDE report said:
This month’s 2018/19 U.S. corn outlook is for larger production, increased domestic use, greater exports, and higher ending stocks. Corn production is forecast at 14.827 billion bushels, up 241 million from last month on an increased yield forecast. If realized, the crop would be the second highest on record. Among the major producing states, yields are forecast to be record high in Illinois, Iowa, Nebraska, Indiana, Ohio, and South Dakota.
This is an indication that the price of corn is likely to remain at depressed levels in the foreseeable future. Further, the current problems on trade complicate the demand issue. Yesterday, Donald Trump announced fresh $200 billion tariffs on Chinese goods. Therefore, there is a likelihood that the price of corn will decline, potentially to the $3.40 level.
