January 22, 2010

US bumper crop may translate into falling corn prices

In 2009, American corn production hit record levels at 13.151 billion bushels (367.7 million tonnes) - achieving an on-year increase of 9%.

With the second highest level of plantings ever at 86.5 million acres (behind 2007's 93.5 million), production was driven by all-time high yields in 2009 at 165.2 bushels/acre, according to the USDA figures.

Analysts have reported that much of the harvest is of a lower quality - with widespread cold and wet conditions halting growing and delaying harvesting in the final months of 2009, meaning larger volumes will be required to meet ethanol and animal feed demands.

However with such large supply, a drop in grain prices - as indicated by US futures - is almost inevitable. While the extent of any feed price fall is unclear, this will provide help to embattled US feedlot operators in the coming year, and is likely to have a large bearing on the price of feed grain in Australia and around the world.

Animal feed usage of corn in the US this year is estimated at 5.5 billion bushels.