A wet spring delayed the U.S. corn harvest

According to the USDA’s monthly corn outlook, production is expected to be lower than last year, but corn exports and corn consumed for ethanol is also expected to be lower for the 2019-20 harvest season. Decreasing consumption for this season is expected to outpace the decline in production, which will likely cause an increase in corn inventory in storage (CORNIV.USA). 

SONAR: CORNPC.USA, CORNIV.USA

The average price for a bushel of corn received by producers (CORNPC.USA) will return to the same level as the baseline set by the USDA. Prices received are higher when it is the offseason. As the harvest continues, the prices will remain close to the baseline.  

Large amounts of corn and corn products are moved by rail, so the decline in production will likely result in reduced carloads year-over-year. According to the Association of American Railroads (AAR), 65% of grain produced in the U.S. is corn. Approximately 70% of corn is moved by truck over a short distance to be made into ethanol. Barge accounts for about 10% of U.S. corn movement — typically to stage corn for exportation, and rail movement takes the last 20% of corn. 

On average, 49% of grain moved by rail (RTOGR.USA) is corn. Decreased and lagged production of corn impacted grain carloads in the beginning of September. In comparison to the previous year, there is a clear lag in harvest time, and the lower productivity will likely keep carload volumes below 2018 levels. 

SONAR: RTOGR.USA

When the harvest season ends, corn moved into storage then gets used, causing prices to increase as supply decreases. As such, as costs get too high, consumers search for cheaper alternatives. Since the current harvest season has lagged, higher prices have dragged out, such that large consumers imported corn at a lower cost than pulling more corn out of storage. Corn consumption, in addition to production, is projected to be lower than last year, which means that there will not be a shortage of corn in the U.S.