Demand for U.S. corn has been good, and the fact the size of the corn crop has been trimmed has helped with corn prices.

In fact, the rebound in prices from just a few months ago has left Ed Usset, professor emeritus and grain marketing economist with the University of Minnesota, at a loss for words.

“I’m kind of speechless because a month ago I wrote a column Corn and Soybean Digest and I suggested we could have early lows this year, that the market will not wait until harvest to reach its lowest price levels, that in fact the lows could come before harvest,” Usset said. “It’s happened before and I'm speechless because I was right.

“Here we are today (Sept. 15), even though we’re off a nickel, at $3.65 for December futures,” he continued. “And we’ve got southwest Minnesota anywhere from $3.15 to $3.25, and if you’re near an ethanol plant, maybe even better than that.

“I’m looking at a bid from Welcome, Minn., at $3.45 for cash corn. That beats the hell out of the $2.60-$2.70 that we saw a few months ago. I don’t think many people are going to party hard on $3.20 corn, but boy oh boy, that’s a nice rebound from as low as it was and it’s got to give you something to think about if you’re a producer, particularly because this is a special year in terms of thinking about your cost of production because there have been some special payouts with the pandemic and so on,” he added.

Usset said his thought on corn is the same as on soybeans, although soybeans are more impressive, and that is “you almost have to reward a rally like this, don’t you? I mean reward a rally, you have to get something done, you have to make some sales.”

Usset did point out that from the time the market opened in the morning to the time he gave his report just a short time later, both soybeans and corn were off 4 cents.

“I don’t know what happened that turned it a little low, but given the up and down we’ve had over the last month, being off 4-5 cents isn’t a big deal,” he said.

At one local elevator in west central Minnesota regularly followed in this column, as of Sept. 15, the September cash price for corn was $3.13 and basis was -53 cents under. The January 2021 futures price was listed at $3.76 and basis was -3 cents under.

There are a couple factors that have helped trimmed this year’s corn crop – the derecho storm that went through a wide swath of the Corn Belt in August, and dry conditions in parts of the Corn Belt.

“Those were contributing factors, confirmed by the September WASDE report (World Agricultural Supply and Demand Estimate) that the crop quit getting bigger in early August,” he said. “The derecho was phase one of ‘we’re going to make this crop a little smaller.’ We’ve had some dry weather, parts of Iowa are pretty dry and people are simply rethinking this bumper crop scenario.

“It’s still going to be a good crop, but it’s not going to be this overwhelming bumper crop and we’re trimming this crop back a bit. That’s what’s driving this rally, that in addition to just some healthy demand out there is contributing to this rally,” he added.

Exports have been running “really good,” and although ethanol has continued to limp along, it’s okay and not deteriorating any worse and maybe even recovering a little bit, though it’s still not what one would call “robust.”

But while the weather factors have helped with the rally, it’s good demand that has helped maintain the better prices. Export demand has been good, mainly from China, Usset noted.

“The best thing you can have in a market is good demand,” he said. “We can have derechos and dry weather and trimming the supply side kind of rally, they’re all good, but demand is more persistent. Good demand can drive a market to be stronger in a more sustainable manner.”

Regarding ethanol, that industry may be getting a bit of a boost as the Environmental Protection Agency recently refused to grant retroactive reductions in ethanol production quotas that were sought by a number of oil refineries. EPA’s action denied 54 waiver requests covering 2011-2018 that the refiners were seeking.

“That’s a good thing for ethanol. That should help demand,” he said.

And with this slight price rally for corn, though not where producers would prefer, Usset said it provides an opportunity for producers.

“I think you should sit up and pay close attention to a rally like this. In other words, get something done if you’re behind,” he said. “Maybe some people have been ahead of the game, but if you haven’t been ahead of the game, certainly if you’ve got last year’s crop still hanging around, here is an opportunity in front of you. If you haven’t started new crop sales this year, here’s an opportunity. Get started. Get something done.”