Corn Crop Uncertainty Raises Volatility for Grain Elevators

Key Points

• Planting delays throughout the U.S. Corn Belt this spring threaten corn availability for the 2019-20 marketing year, particularly in the eastern Corn Belt states of Illinois, Indiana, Michigan, Ohio and Wisconsin.
• Grain merchandisers and end users in the eastern Corn Belt have bid cash corn up to levels rarely seen in an effort to stockpile old-crop corn ahead of an uncertain fall harvest.
• USDA-NASS surprised the market with a much higher than expected 2019 corn crop forecast despite widespread market uncertainty on yield potential and harvested acreage this fall.
• With conflicting estimates of potential corn availability this fall, elevators are navigating extreme volatility in basis and carry.
• Grain elevators can score big wins – or losses – amid the heightened volatility. However, elevators in corn-deficit regions will have to compete for scarce bushels to maintain grain-handling operations, or brace for hard times ahead if they don’t.

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