Tighter Corn Stocks Boosts Prices and Changes Demand

The grain market is starting to get nervous as corn supplies tighten, partly due to China’s feed demand. “As we start to get U.S. ending stocks pulled down and corn prices get higher and more variable, all of a sudden, the wheat supply chain becomes an alternative feed source,” said Frayne Olson, crops marketing economist, NDSU Extension. In addition to feed demand, Olson is also watching ethanol consumption. “Ethanol has traditionally been a very large corn user. We’ve seen a reduction in the amount of corn going to the ethanol sector. The USDA forecast is for lower levels to continue. There’s a rebound in ethanol production, but production levels are much lower than we saw before COVID. As corn prices have gone up, ethanol margins have been squeezed tight. The ethanol futures market has kept pace, but there’s a limit. As corn prices go higher, ethanol consumption may drop.”