The price of corn, like the price of other commodities, is influenced by a wide array of factors that reflect a combination of current and expected supply and consumption. 

The market continually judges whether the price of corn is adequate to ration the available supply. 

While expectations about demand over the course of the marketing year influence that judgment, the on-going pace of consumption reveals the adjustments that are being made to accommodate the available supply.

A pace of consumption that cannot be supported implies the need for higher prices, while a slower pace than required implies the need for lower prices.

In the current marketing year, the small U.S. crop requires a substantial reduction from the level of consumption in the 2011-12 marketing year. Based on the current forecast of the crop size, imports of 75 million bushels, and the assumption that year-ending stocks cannot be reduced below about five percent of consumption, corn consumption during the current marketing year will be limited to about 11.2 billion bushels. 

That is 1.326 billion bushels (10.6) percent less than consumed in the previous marketing year.  The USDA has forecast a decline in consumption of 1.376 billion bushels and year-ending stocks slightly above five percent of consumption.   

By category, the USDA has forecast that exports will decline by 393 million bushels (25.5 percent), corn for ethanol and by-products will decline by 500 million bushels (10 percent), other processing uses will decline by 71 million bushels (5 percent), and feed and residual use will decline by 412 million bushels (9 percent).

To date, the pace of corn exports has been much slower than needed to reach the USDA projection for the year. Based on the weekly Export Sales report, exports during the first seven weeks of the marketing year averaged 19.1 million bushels per week. 

To reach the USDA projection, weekly exports for the remainder of the year need to average 22.6 million bushels.  

As of Oct. 18, 292 million bushels of corn had been sold for export, but not yet shipped. Those outstanding sales are 52 percent less than outstanding sales of a year earlier. 

Every major buyer has purchased substantially less U.S. corn than purchased last year. There may be some opportunity for exports to accelerate as the year progresses as competition from wheat and South American corn moderates.