Coronavirus may bring lowest season-average corn price in 14 years

This year’s corn crop could sell for the lowest price in years — probably around $3.10 a bushel — depending on how quickly demand for ethanol rebounds and whether or not farmers plant less corn land than they planned to in March, said Dan O’Brien, an economist at Kansas State University. “If there is hope for better outcomes in the U.S. corn market, it rests on when the current downtrend that has been so dominated by negative Covid-19 effects will change and begin to turn higher in a healthy, positive way,” he wrote in offering possible outcomes for the new crop.

In the scenario O’Brien regards as the most likely, farmers plant 94.5 million acres of corn rather than the 97 million acres they indicated in a USDA survey in early March, and corn-for-ethanol is 5.25 billion bushels, slightly lower than in recent years but better than the 5.05 billion bushels forecast for this marketing year by the USDA. The season-average corn price would be $3.10 a bushel, the lowest since 2006/07 and 50 cents lower than the 2019 crop.

The average corn price could be $2.20 a bushel, equal to the USDA loan rate, if there is a large crop, sluggish demand for ethanol, and ending stocks above 4 billion bushels, said O’Brien. Kansas State says an average cost of production for corn in Kansas is $3.60 a bushel.

If farmers have the flexibility, “they will likely take steps to avoid these losses,” said O’Brien. “The collective effect of U.S. corn producers making these profit-maximizing/loss-minimizing choices is likely to significantly change these projected outcomes.”