While I’m not usually one for uniformity, there is something compelling about the consistency of this monthly corn stocks-to-use chart. As the 2020-2021 marketing year came to an end with the close of August, the cmdty National Corn Price Index (NCPI, weighted national average cash price) showed a daily average price for the marketing year of $5.23 (green line). This was up from July’s $5.15 and continued the string of generally smooth increases posted since last September’s $3.34. Based on my correlation study dating back through the 2010-2011 marketing year, the end of August average NCPI calculation put 2020-2021 ending stocks-to-use at 9.6% (orange column). This is the tightest since 2010-2011’s 8.6%, with that marketing year showing a daily average cash price of $6.15. It’s interesting to note that hearing into the 2021-2022 marketing year the NCPI was calculated at $5.80, meaning it is possible stocks-to-use could tighten further in September despite the beginning of harvest.
As for futures spreads, corn’s Cost of Carry table at the end of August was still bullish with 2021-2022 spreads holding below the 33% calculated full commercial carry level (see table as second attachment on website). However, from a technical point of view the Dec-March is testing support on its daily close-only chart at the 8.5-cent carry level, with a break of this support projecting an extension to the 10.5-cent carry level. Similar to what we’ve already seen take place in soybeans, this would take the initial 2021-2022 corn spread into neutral territory beyond the 33% threshold, as it was sitting near 32% at Tuesday’s close. Both the Dec-May and Dec-July spreads are in downtrends (stronger carry) on their respective charts as well, meaning the next 30 to 45 days could see a shift in commercial view of long-term demand as harvest plays out. If so, this could keep buyers, both end-users and noncommercials, on the sidelines over the coming weeks.