Corn: 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 as compared to demand results in a higher stock-to-use ratio—a scenario that’s often negative for crop prices.
Corn’s latest global stock-to-use ratio in the December 2016 report stood at 21.7%—slightly above the ratio of 21.4% in November 2016. In December, the stock-to-use ratio of corn, as you can see in the above chart, has remained higher than in previous years, except for 2015. In December 2015, the global stock-to-use ratio of corn was 21.8%.
Corn’s global stock-to-use ratio in December rose slightly due to a rise in the global corn inventory. The global corn inventory rose by 1.89%, or ~222 million metric tons, in December, as compared to 218 million metric tons in November 2016.
Global corn inventory remained 6% higher than in December 2015, when the global corn inventory stood at ~209 million metric tons.
A higher corn supply without changes in consumption usually leads to lower realized prices, which impact farm incomes. These factors all have an impact on corn prices and determine the fate of industry giants like Monsanto (MON) and Syngenta (SYT). Such factors also impact fertilizer companies (MXI) like Chemical & Mining Company of Chile (SQM) and energy companies like Renewable Energy Group (REGI).
In the next part, we’ll discuss how corn prices have moved in the past month.