The last time we had a glut like this one there was a major correction in stock prices -- but correlation is not causation.
Two things happened to end the last glut. First, there was an expansion in the use of biofuels, mostly ethanol made from corn, from 880,000 barrels per day in July, 2011 to 963,000 barrels per day by the end of the year.
Current production is at the upper end of that band -- 931,000 barrels per day in the Aug. 8 report -- but consumption continues to be well below targets set in 2007 and the gap is expected to increase, mainly because demand for gasoline is actually going down thanks to new efficiency standards. Production is now approaching the "blend wall," where 10% of U.S. gasoline is ethanol.
The price of corn futures, meanwhile has continued to deteriorate and has now gapped-down to 2011 levels.
The U.S. Department of Agriculture is not yet ready to call this a bumper crop. Grain traders are skeptical of the USDA estimates however, according to AgWeb, believing they may be too low.
Some traders express hope that an early frost and slow-maturing crops could cut production from current estimates, but those are hopes.