Even if the US has a huge corn harvest this year, corn prices may not fall much further, according to new analysis by Macquarie. The bank, realizing that traditional models used to calculate the price floor were not working, devised a new model that shows the link between the stocks-to-use ratio and how much buyers need to pay for supplies is not as strong as once thought. The new model takes into account a changing economic landscape where despite high crop prices, farmers are facing increased costs for inputs, increased land valuations in the US and transportation fees in Brazil. Accounting for such production costs shows that corn prices find support well above traditional estimates of $2 a bushel.
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