We don’t know yet what the impact of the extreme wet conditions will be on supply, but it certainly appears there will be some reduction the overall potential for corn production, at least.  Given this reduction in supply potential, it is the market’s job to scale back demand.  Currently the USDA forecasts that total corn utilization will be reduced by 3.47 percent, from 12.96 billion bushels to 12.51 billion bushels.

Below you will see a record of the 15 biggest one year reductions in corn demand since 1920, representing about one significant supply problem every seven to 10 years, on average.  By comparison, the 3.47 percent reduction in demand the USDA forecast looks modest.  The biggest reductions were in the “dirty 30s” when a combination of dry weather and deflationary prices impacted supply and demand.  In more modern times the biggest one year hits on corn demand were in 1974 (-18%), 1993 (-10%), and 1995 (-9%).

A 10 percent reduction in corn demand from 2007/08 would imply cutting 1.3 billion bushels, more than double the current USDA forecast.  A more extreme move like 1974/75 implies cutting a whopping 2.4 billion bushels from demand, taking us back to about a 10 billion bushel demand base.

Biggest Historic U.S. Corn Demand One Years Reductions (1920-2007)

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