Cream of the Crop? Analyzing Corn, Soybean, and Wheat Prices

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Part 2
Cream of the Crop? Analyzing Corn, Soybean, and Wheat Prices PART 2 OF 7

Analyzing Corn’s November Stock-to-Use Ratio

Corn’s stock-to-use ratio

In the agriculture industry, the stock-to-use ratio tells us how much inventory of a particular crop, carried over from the previous period, is available as a percentage of total consumption. A higher supply of crops to its demand results in a higher stock-to-use ratio. It’s often negative for crop prices and vice versa.

Analyzing Corn&#8217;s November Stock-to-Use Ratio

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November levels

Corn’s latest global stock-to-use ratio in November 2016 stood at 21.6%—just slightly below the ratio of 21.5% in October. In November, corn’s stock-to-use ratio in the above chart remains above other years’ levels except 2015. In November 2015, corn’s global stock-to-use ratio was 21.7%.

November inventory

Corn’s global stock-to-use ratio in November rose slightly due to a rise in the global corn inventory. The global corn inventory rose by 64 basis points to ~218 million metric tons in November—compared to 217 million metric tons in October 2016.

However, the global corn inventory remained 3% higher compared to November 2015 when the global corn inventory stood at ~212 million metric tons.

A higher corn supply without changes in consumption usually leads to lower realized prices impacting the farm income. These factors impact on corn prices. They determine companies’ fate such as Monsanto (MON) and Syngenta (SYT). They also impact fertilizer companies (MXI) such as Chemical & Mining Co. of Chile (SQM) and energy companies such as Renewable Energy Group (REGI).

In the next part, we’ll discuss how corn prices moved during the one-month period.


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