Biggest US corn crop yields price uncertainties

A projection for a near-record US corn harvest this fall at a period when the world economy is down has cast misgivings what will happen to the crop's price.

 

Darin Newsom, senior analyst for business-information company DTN said the question is whether the demand-driven market that exploded in mid-2006 can continue to sustain itself if the crop fulfills such high expectations.

 

The US Department of Agriculture has pegged the corn crop to be 12.8 billion bushels, which would be behind only the 2007 record crop of 13 billion bushels.

 

A farmer who is a longtime national industry leader said prices and supply have put corn in a position to benefit both the producers and buyers.

 

Ken McCauley, a past president of the National Corn Growers Association noted that corn prices will be more reasonable than yearago which will be good for the livestock and ethanol sectors.

 

Corn prices for December delivery are trading for less than US$3.50 a bushel.

 

The USDA has increased its forecasts for demand for the marketing year of September 1 through August 31, 2010.

 

But the jump has some confused, particularly because corn exports for this year's first six months were down 40 percent.

 

Mike Woolverton, a Kansas State University grain economist relates that while world demand may come back the number of livestock in the US is down.

 

Chad Hart, a grain economist at Iowa State University, said he could understand the increased forecast demands for export and ethanol markets.

 

He cited advance sales and projection of a weaker dollar as reasons to boost the export prediction. And he said there are viable reasons to think ethanol's needs will increase because the industry is "starting to come to life" with higher gasoline prices.

He is however concerned with feed demand due to weak margins for beef, poultry and pork, no thanks to fewer animals.

 

The large crop is projected in a year when the number of acres planted is down: 6.5 million fewer acres in the US than in 2007. But this year's crop continues to benefit from improved seeds and an ideal growing season for much of the Corn Belt.

 

That's why the USDA revised its forecast for a record yield of 159.5 bushels an acre. Hart said the only thing that could put a damper on those forecasts is an early frost. Corn was generally planted a few weeks later this year because of spring rains, so the harvest will slip deeper into the fall.

 

But to get higher prices, Hart said "someone has to run short of corn and I don't see that happening."

 

The US Department of Agriculture is projecting the corn crop to be 12.8 billion bushels, behind only the record 13 billion bushels in 2007, which could result in pricing pressures.