U.S. corn demand has been impressive since the 2024/25 marketing year began in September, leading to more eventful USDA reports this season. The December WASDE report is no exception, despite the report’s tendency to be more lackluster than other months.
The USDA cut 2024/25 corn ending stocks by 200 million bushels in December, bringing the carryout forecast to 1.738 billion bushels. The carryout dropped below the 2023/24 marketing year estimate of 1.760 billion bushels, which was also notable.
The sharp reduction was due to a 50-million-bushel increase in corn ethanol demand, bringing the forecast to 5.50 billion bushels. Corn export demand also rose by 150 million bushels from November to 2.475 billion.
It was possible that the agency could have left the corn ethanol forecast unchanged despite production sitting 4.4% higher than a year ago. Estimated crush was slightly higher than last year’s pace at 21.7% of the USDA’s target. A higher corn export forecast was more likely, with shipments at 19% of the USDA’s target, compared to the 16% for last year’s pace and the five-year average.
In October, we highlighted that strong corn demand is chipping away at higher carryout estimates. The current stocks-to-use ratio, which calculates the relationship between supply and demand, fell to 11.4%, compared to 11.7% at the end of the 2023/24 season. That was the first year-to-year decline in the ratio since the 2019/20 season before it fell to its historical lows, which started the bull market in 2020.
The U.S. balance sheet is undergoing a shift that could support the corn market moving forward. The next Quarterly Grain Stocks report in January could show a notable decline in the percentage of corn held on farms. The September report began to show increased farmer selling compared to prior quarters, so post-harvest on-farm storage will be closely watched next month.
While the USDA doesn’t adjust corn and soybean production estimates in December, the agency may come back in January with a few adjustments. In November, the USDA lowered its corn yield estimate to 183.1 bushels per acre, which is still a record. Another adjustment lower in January could provide additional support to corn and soybean prices as the USDA puts a bow on the 2024/25 season.
The global balance sheet continued to tighten this month, with ending stocks forecast 7.7 million metric tons lower than in November due to fewer supplies in the U.S., European Union, Mexico, and China.
The corn market has been on a rollercoaster these past few years. Still, the adage rings true: “High prices cure high prices, and low prices cure low prices.”
Headline ending stocks results from the December WASDE report.
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