What is in this article?:
• From a price perspective, unless there’s a recurrence of drought, it’s going to be hard to put $6.50 back on a new-crop corn price for a September delivery.
• We could very easily see a ‘4’ in front of this crop.
CONSIDERING CURRENT planting intentions, most analysts are leaning towards a bearish stance on corn going into the 2013 production season.
Some sense of parity appears to be returning to U.S. commodity markets, meaning a more bearish outlook for corn, says Chris Wheeler, vice-president of operations for AGrowStar, LLC.
“There are a lot of variables, and for the first time in three or four years we’re probably leaning towards a more bearish stance on corn, considering current planting intentions,” said Wheeler at the recent spring conference of the American Peanut Shellers Association, held in Albany, Ga.
“Unless we have a drought or some unknown demand, we’ll have lower prices, and demand will return to the market in some form.”
In Georgia, the corn acreage itself was the same from 2011 to 2012, says Wheeler, but the major difference is that there was a big jump in harvested acres this past year.
“Instead of abandoning a lot of acres, growers harvested as much as they could get their hands on to take advantage of high prices.
“That was coupled with the second highest corn yield in the U.S., with 180 bushels per acre from 310,000 harvested acres. That has never happened in Georgia to my knowledge.
“We also had the second-highest yielding corn farmer in the country at 374 bushels per acre,” he says.
It was a much different story in the U.S., however, with a big jump in acres and almost-record abandonment.
“The acres were there to make a big crop across the country last year, but we just couldn’t go and get it because of the drought.
“That was coupled with a very poor average yield in the U.S. Trendline yields are close to 158 to 160 bushels per acre, but we came in at about 123 bushels.
“The Southeastern farmer finally had high prices and good yields. That’s somewhat of an anomaly for corn. Whenever we have high prices, it’s usually because we have a drought in the Southeast and up North, and we don’t make anything here,” says Wheeler.
Two years ago, ending stocks for the U.S. were at almost 2 billion bushels, which is a 13-percent carryout, he says. Now, carryout is at 5.6 percent, which is close to an all-time low.
“So we are starting to ask the question of whether or not we have enough corn to get through the summer.
“In 2004-2005, we had a carryout of almost 20 percent, so you can see it has been a steady decline. That’s because of an increasing demand led by ethanol. Ethanol went from hardly anything to the current 5 billion-bushel consumption.”
On the yield side, the U.S. had been on a steady increase for about 30 years, says Wheeler.