A number of commodity analysts continue to believe corn prices will experience on-going volatility, despite the fact that USDA this week predicted this year’s corn crop will be the largest on record at 13.505 billion bushels. The “World Agricultural Supply and Demand Estimates” report this week from the World Agricultural Outlook Board forecast that 92.2 million acres of corn would be planted this spring with 85.1 million acres harvested for grain, 3.7 million more acres than last year. Yield was put at 158.7 bushels per acre, 3.0 bushels below the 1990-2010 trend line reflecting the slow pace of planting progress through early May. Nonetheless, this year’s forecast corn yield is the third largest on record.
USDA forecast ending corn stocks for 2011-12 to be 900 million bushels, 170 million bushels more than the revised upward (55 million bushels) stocks of 730 million bushels for 2010-11. The 900 million bushels represents a very tight 6.6 percent stocks-to-use ratio for 2011-12 and will keep the grain market “on edge,” according to the May 12 issue of the Daily Livestock Report. For 2010-11, the stocks-to-use ration will be 5.4 percent, according the reports this week.
USDA predicted 2011-12 average farm prices for corn to be $5.50-$6.50 per bushel, up significantly from the $5.10-$5.40 average estimated for 2010-11. In 2009-10, the comparable corn price was $3.55 per bushel. “It’s hard to say what yields will be,” Chad Hart, agricultural economist with Iowa State University told AgWeb this week. “In previous years when corn planting has had this sort of delay, we’ve seen a reduction in yield of about 3 to 5 bushels per acre.” “There’s a lot of uncertainty out there,” Hart said.
A clear argument could be made that corn acreage will eventually be reduced, because of concern that the one third of this year’s additional acreage is expected to be planted in northern plains states, where cool, wet weather has delayed planting, according to Rich Nelson, director of research at Allendale, who was also quoted in the AgWeb report. “Slow planting will occur over the next few weeks,” Nelson said, “I would suggest we could see further yield reduction in the coming months.”
