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• Without a meaningful increase in the U.S. production estimate in January, corn prices appear low enough to encourage the increase in consumption made possible by the large 2013 crop.
Corn prices managed a small rally following USDA’s Nov. 8 Crop Production report which contained a production forecast that was not quite as large as earlier feared.
Since then, however, new lows have been established and prices are currently only about 10 cents above the pre-report level.
According to University of Illinois Agricultural Economist Darrel Good, the recent corn market commentary has been dominated by two themes. One is that the USDA’s production estimate to be released in January will be larger than the November forecast. The second is that corn consumption for ethanol production will be negatively impacted if EPA’s preliminary rule making for the Renewable Fuels Standards (RFS) for 2014 is actually implemented.
Good said that both of these expectations are questionable.
“Any change in the January corn production estimate from the November forecast would be the result of a change in either, or both, the estimate of acreage harvested for grain or the U.S. average yield,” Good said.
“The November National Agricultural Statistics Service (NASS) planted acreage estimate was fully consistent with the USDA’s Farm Service Agency (FSA) report of planted acreage.
“Over the previous 10 years, the January U.S. average yield estimate was above the November yield forecast five times and below the forecast five times. Even in the five years when the November yield forecast exceeded the September forecast, as it did this year, the January estimate was below the November forecast twice.