Midwestern corn farmers are hard at work harvesting this year’s corn crop, but they are still far behind schedule. As of last Sunday, only 76% of the U.S. corn crop had been harvested, well below the five-year average of 92%, and the slowest pace in a decade.
This year’s crop was planted late, and wet weather this fall hampered harvest, though most producers expect to finish harvest soon. The corn market has largely been ignoring the delay, falling to a two-month low this week near $3.65 per bushel.
However, many market watchers are still concerned that this year’s crop will be smaller than the U.S. Department of Agriculture is predicting. Citing concerns about crop quality, unplanted acreage, and fields that may not be harvested, there is a significant camp that is waiting for a big price rally. The next major update from the USDA will likely come in mid-January, when the government agency will issue its outlook on this year’s harvest, as well as stockpiles of grain across the United States.
**Gasoline Revs Up
Gasoline prices hit a two-month high on Friday morning, rising just as drivers get ready to hit the road for Thanksgiving.
Gas is going sky-high due to major U.S. refineries being shut down; in mid-October, 17% of U.S. refinery capacity was offline. Lost refining capacity leads to a backup of crude oil and less gasoline being produced, which can create a short-term supply mismatch.
This problem should be resolved soon, as refineries are coming back online, with almost 90% working at full speed now, although even that figure is well behind normal operating levels.
Similarly, U.S. ethanol stockpiles are at a two-year low due to low production levels over the previous months. Ethanol producers are increasing production to make up for the gap, but short-term shortages may contribute to high prices at the pump. Rising production of ethanol could help boost corn prices, as approximately 40% of all U.S. corn goes to make the fuel.
As of midday Friday, December gasoline futures traded for $1.67 per gallon, a price that represents wholesale gasoline, without taxes, transportation, or other costs included. Meanwhile, December ethanol futures traded for $1.43 per gallon.