The size of the U.S. corn crop will heavily influence the market for the next few months.

By Darrel Good, University of Illinois

The size of the U.S. corn crop will be the most important price factor in that market for the next few months. The market is expecting a crop large enough to meet consumption needs without price rationing, but is not expecting as large an increase in marketing year ending stocks as projected a month ago. The USDA's production forecast to be released on Sept. 12 will provide for updated projections of marketing year consumption, ending stocks and average farm price.

At the margin, the size of the inventory of old crop corn on Sept. 1 will also influence the expected balance of supply and consumption during the current marketing year. Consumption of corn during the final quarter of the 2012-13 marketing year may have exceeded the USDA's projection in the August WASDE report. If so, stocks of old crop corn on Sept. 1 may have been smaller than currently projected. The consumption of corn for ethanol and by-product production for the year just ended was projected at 4.65 billion bushels. The USDA estimates that 3.448 billion bushels were used for that purpose during the first three quarters of the marketing year. That is 9.7 percent less than consumption during the same period a year earlier and is in line with the 9.3 percent reduction in ethanol production reported by the U.S. Energy Information Administration.