For most of 2016, corn prices were relatively low compared to the trailing-five-year period. Prices averaged ~$3.6 per bushel in 2016, lower than the average of $3.8 per bushel in 2015. Let’s look at how corn prices have fared so far in 2017.
Prices remain a challenge
YTD (year-to-date), corn prices averaged $3.65 per bushel, compared to $3.74 per bushel in the corresponding period in 2016. According to the USDA’s (U.S. Department of Agriculture) monthly report in June, the global corn stock-to-use ratio for the 2017–2018 season came in slightly lower month-over-month at 18.3% compared to 18.4% in May.
However, year-over-year, the corn stock-to-use ratio fell compared to 21.3% in June of the 2016–2017 season.
The total inventory or ending stock of corn stood at 194.3 million metric tons, lower month-over-month in June compared to its level of 195.3 million metric tons in May. In the corresponding month a year earlier, corn’s ending stock stood at 224.6 million metric tons.
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 relatively low corn stock-to-use ratio may lead to higher corn prices. Monsanto (MON), Syngenta (SYT), CF Industries (CF), and The Mosaic Company (MOS) are a few examples of agricultural fertilizer companies (MOO) that benefit from positive corn movements.
Next, we’ll discuss soybean prices.