With one month remaining in the 2020-2021 US corn marketing year, the daily average price for the cmdty National Corn Price Index (NCPI, weighted national average cash price) at the end of July was $5.15. Using the correlation between cash price and ending stocks-to-use back through the 2010-2011 marketing year, this put the end of July available stocks-to-use calculation at 9.7% (gold marker). Corn’s supply and demand situation tighten from the end of June when the NCPI showed a marketing year daily average of $5.02 correlating to an available stocks-to-use calculation of 10%. In its July Supply and Demand report, roughly for the end of June, USDA’s estimates created an ending stocks-to-use figure of 7.2% (gold spotted marker) indicating it continued to underestimate US corn stocks. This is the first marketing year since 2013-2014 (green marker) USDA has underestimated stocks of US corn, with the previous 4 marketing years all showing solid overestimations.
Corn’s cost of carry table at the end of July continued to show a bullish fundamental situation as well with the Dec-March futures spread at a carry of 8 cents and covering 30% calculated full commercial carry (cfcc). Recall from previous discussion 33% or less is considered bullish. The Dec-July futures spread (used as a proxy to study the 2021-2022 forward curve) closed at a carry of 13 cents and covering roughly 21% cfcc.