For argument's sake, lets assume production is "moderately" tapered back from earlier estimates (say to 145-155 bu./acre). If this ends up being the case, then it will eventually become ALL about DEMAND. As we are aware, this could be where we struggle to gain traction. My thoughts are it all hinges on price. Most in the industry are currently questioning the USDA's demand estimates, believing they are overly optimistic, especially the 1.3 billion bushel export estimate (high by 200 to 400 million) and the feed usage estimate.
I would agree with the bears: at our current price the estimates simply seem too high. But if prices were to fall sub-$4.50 like many bears argue, then the USDA's demand estimates could be right on target. A lot will obviously hinge on China and whether or not they try and rebuild government surplus on the break. My hunch is not only will China, but other importing nations will also try and increase supplies on any major price break sub-$4.50.
Bottom line: Without some type of EXTREME production setback, you can shave 700-800 million bushels off production but still be left with a new-crop ending stocks number of over 1 billion bushels. With this being the case, prices well above $5 are still too high to attract enough demand to squeeze the balance sheet.