“Ending stocks of corn are expected to be 280 million bushels (25 percent) smaller than stocks at the start of the year. Increased planted and harvested acreage and a return to trend yields in the United States in 2012 would result in larger crops and prospects for a further increase in domestic stocks by the end of the 2012-13 marketing year.

The increase in corn production is potentially very large. Planted acreage of 94 million, as is currently being suggested by some, would result in acreage harvested for grain of about 87 million acres. A trend yield of 160 bushels would result in a crop of about 13.92 billion bushels, 1.6 billion bushels larger than the 2011 harvest.

“The slow pace of exports and prospects for adequate year-ending stocks contributed to a lower forecast of the marketing-year average farm price of corn and soybeans in the USDA’s December World Agricultural Supply and Demand Estimates (WASDE) report,” he said.

The average farm price of corn is projected in a range of $5.90 to $6.90, 30 cents below the November projection. The average farm price of soybeans is projected in a range of $11.70 to $12.70, 90 cents below last month’s forecast.

“Relatively low prices in September and October, particularly for corn, confirmed that substantial quantities were sold at lower prices before harvest, and those sales contribute to the lower price forecast for the year,” he said.

“In Illinois, for example, the average price received by farmers for corn delivered in September and October 2011 was about 40 cents below the average daily spot bid of country elevators during those two months. That difference implies that a substantial amount of corn delivered during those two months had been forward priced at lower levels.

Crop prices are expected to remain generally weak into the new calendar year, with some important support areas currently being tested.
“After the first of the year, South American crop prospects will take on more importance. The continuation of the La Nia weather pattern could result in less than ideal weather conditions in parts of Brazil and Argentina. History suggests that the corn crop would more likely be impacted than would soybean production,” Good said.

Prices will also take direction from USDA’s Jan. 12 reports containing the final estimates for the size of the 2011 U.S. corn and soybean crops, the estimates of grain stocks on Dec. 1, 2011, and an estimate of winter wheat seedings.