NAPERVILLE, Illinois, Feb 22 (Reuters) - Just a few years ago, corn at or above $4 per bushel was often viewed favorably by U.S. farmers from a profit perspective. But $4 today is not the same as it was back then since production costs remain elevated after spiking a couple of years ago.

Chicago March corn futures have plunged more than 9% so far this month, the biggest February percentage dive since 1975, reaching a contract low of $4.04-1/4 per bushel on Thursday.

That is front-month corn’s lowest level since Nov. 13, 2020, though that same price back in late 2020 would be more like $4.80 per bushel in today’s dollars, adjusted for inflation.

Early 2020 prices followed the same idea. Thursday’s trade in March corn was the date’s lowest since $3.77 four years ago, though that adjusted price is around $4.49. A year ago, March corn settled at $6.74 per bushel in nominal terms.

Projections released by the U.S. Department of Agriculture in October implied the cost per bushel to raise corn domestically in 2024 would be around $4.80, down from 2023. CBOT December corn, which represents the upcoming harvest, has undergone its biggest February slide since 2013, settling at $4.53-1/4 on Thursday.


The expectation for massive U.S. corn stockpiles both this year and next has driven the decline of futures prices. A record 2023 crop is seen lifting 2023-24 ending stocks by 60% over the previous season.

USDA last week projected an additional 17% climb in ending stocks for 2024-25, which starts Sept. 1. The 2.532 billion-bushel figure would represent the largest U.S. carryout since 1987-88.

That forecast was not necessarily fresh news, as the agency back in October tentatively slated a 24% rise in 2024-25 corn ending stocks versus 2023-24. But since then, the South American corn crop has looked promising, so the additional U.S. supply potential is more burdensome.

USDA’s supply projections for next year are similar to those of February 2020, when 2020-21 U.S. corn ending stocks were pegged at a 33-year high of 2.64 billion bushels with a stocks-to-use of 17.9% versus 17.2% estimated for 2024-25.

Shockingly high U.S. corn planting intentions in March 2020 made that balance sheet even worse by May, as USDA’s first official view of 2020-21 carryout came in at 3.3 billion bushels. Some analysts were as high as 4 billion.

The pandemic unexpectedly slashed both corn acres and prices in 2020, eventually spurring export demand, and unusually poor weather conditions later that summer brought crop yields below trend. That year’s ending stocks eventually settled at 1.24 billion bushels, but that was after an extreme series of events.

Acres are the next potential catalyst to change the U.S. balance sheet, though USDA already has 2024 corn plantings down considerably from 10-year highs in 2023. That is in favor of soybean acres, expected to jump more than 4% this year as soy prices are performing relatively better than those for corn.

In February 2020, corn prices were somewhat outpacing soybeans, and USDA had penciled in well-above-average corn area for that year, even before the acreage survey cranked area much higher still.

On the speculative side, money managers currently hold a near-record short position in CBOT corn futures and options, totaling 314,341 contracts as of Feb. 13. Fund bearishness was much less severe in February 2020, as the net short ranged between 55,000 and 95,000 contracts, setting up room for heavy selling in the next few months. Karen Braun is a market analyst for Reuters. Views expressed above are her own.

(Writing by Karen Braun Editing by Matthew Lewis)