If you’re growing corn this year, you’re growing a product that already has a home and doesn’t depend on exports. You can be sure your crop will be used locally, and that’s a huge bonus, says Lewis Campbell, a corn marketer with South Carolina-based Palmetto Grain Brokerage.

Campbell presented a corn market outlook during the recent Georgia Corn Short Course and Georgia Corn Growers Association meeting held in Tifton.

With corn prices jumping by almost $2 per bushel from last year to between $3.75 and

$4 a bushel, prices haven’t been so high since 1996, when there was a decrease in supply due to fewer planted acres and low yields in the United States, says Campbell.

World corn supplies, he adds, have decreased in recent years from about 181 million metric tons to 93 million. But the surge in prices this year can be attributed largely to the increase in demand for corn to fuel the expanding U.S. ethanol industry, says Campbell.

Currently, 111 ethanol refineries in the United States produce about five billion gallons annually. But production is expected to double in the next two years.

To meet the new demand, he says, U.S. corn growers will need to grow an additional 10 million acres this year. Last year, farmers harvested about 71 million acres for grain.

‘What is this demand for ethanol going to do for you as a Southeastern producer? Whenever an ethanol plant is built in the Midwest, that’s 36 million bushels of corn that are not going on a rail line or coming south,” says Campbell.

High corn prices could deter some ethanol plants in the future, he says, but not the ones that currently are in some stage of planning or construction. “These high prices might deter some feed use or deter some ethanol plants down the road. But the ones that are in the planning or construction phase now will get built and will be running. That’s exciting, and that will keep corn prices on their toes as we move forward,” he says.

Looking at the amount of corn each state has to be exported in 2007-2008, Campbell says Georgia has a corn deficit of about 153 million bushels, producing in the mid-20-million bushel range this past year.

“What we grow in Georgia could supply everyone for about 30 days. It’s exciting to be growing something for which there’s such a great demand,” he says.

All Southeastern states are corn-deficit states, he adds. “The hog industry in North Carolina needs 257 million bushels. Some people say if all of these proposed ethanol plants are built, Iowa will even be importing corn, but that’ll take several years. This whole scenario will shift the entire Midwestern basis levels, as far as where you can and can’t buy corn,” he says.

Looking out to 2015, Georgia is projected to use a “deficit 220 million bushels of corn, factoring in one or two ethanol plants,” says Campbell.

Exports also will be a factor in the market, he says. “We’ll export corn, but if things get tight, that number will have to start coming down. We’re now exporting 40 to 45 million bushels of corn per week. By the USDA numbers, we need to be exporting 33 million bushels per week. If that continues, at some point, USDA will have to shift that balance table again. If they take another 100 million bushels away from us, that gets us into an even tighter situation. So, we need to keep an eye on exports — we have to slow them down.”

Global implications, says Campbell, continue to have an impact on the corn market. “Ten or 15 years ago, it wasn’t such a big issue what the world was doing. Now, everything is a global marketplace. We can see the world stocks of corn dropping from 131 million metric tons down to 126 and then down to 93.

“It’s uncertain what China will do. If they come to the marketplace and start buying corn to feed that country’s growing demand, we’ll be the No. 1 place to get it, but we might not have it to sell. The market will react if China starts to buy corn.”

Much has changed in the corn market in the past year, says Campbell. “At harvest time this past year, corn was in the $2.30 range, we had a two or three-cent LDP, and we were heading into the third largest U.S. crop in history. We got the October crop report and they took away 800,000 acres of corn and dropped our yield by two bushels per acre. In our office, it was unbelievable that we could go through that huge harvest in the Midwest, and it was like it never happened, from a basis standpoint in the Midwest and from the standpoint of the market.”

The market will have to adjust if U.S. growers plant 10 million more acres of corn this year and make 160 bushels per acre, he says.

“The market has to find a new place. It used to be that 500 or 600 million bushels of corn left over was a comfortable number, but now the market has to determine — with all of the demand we have — what will be a comfortable ending stocks level. Is it 400 or 700 million bushels? Maybe if we get the acres planted and go through the summer with no crop problems, at some point the market will say we have enough to get from one year to the next, and you’ll probably see it pull back.”

e-mail: phollis@farmpress.com