In 2011 the story about corn for ethanol being higher than corn for livestock made the rounds in the popular press. The cumulative effect of using corn for fuel or food, as some contend, has been to make the U.S. the only country in the world that is anti-ethanol, Brock says.

In previous years, in fact for most of the history of ethanol production from corn, the industry standard was one bushel of corn for 2.7 gallons of ethanol. Last year the U.S. corn crop was short, but high quality and the standard for conversion went up to 2.9 gallons of ethanol per bushel of corn.

The increase in efficiency, partly due to high quality corn and partly due to improvements in conversion technology, took over a million bushels of corn for ethanol off the market, according to Brock.

Last year carryover stocks for ethanol reached an all-time high of 21.5 million gallons. And, U.S. production seems to have leveled off to about 13.5 billion gallons and on a slow rise to meet the 15 billion gallon federal mandate.

“It doesn’t appear ethanol will demand as much corn as it has in past years. Certainly, there is nothing to indicate to me that demand for corn to make ethanol is going to increase in 2012, nor do much to impact the over-supply that we will have from the 2012 crop,” Brock says.

The agricultural marketing world has been enamored with Chinese imports of commodities over the past few years, but China is not a major, or even a minor, importer of U.S. corn, Brock points out.

“One large grain elevator in Indiana will crush more U.S. corn than China will buy in any given year,” he says.

China grows about the same corn acreage as the U.S., but produces only about half as much corn. There is a reason — The Chinese government has no incentive to build large confinement livestock operations that would demand high quantities of corn for rations. The average size of a Chinese swine operation is about nine pigs, or one litter per year.

“China wants our cotton and our soybeans, but they don’t want our corn. Japan is the largest importer of U.S. corn and there is no indication they are looking to increase the amount of corn they buy from us,” Brock says.

The financial fiasco currently being sorted out in Europe is likely to hurt corn exports to those countries. They have the highest percentage of wealth among all the countries of the world, but their financial house is in a mess.

Don’t count on any significant increase in corn purchases there, the economist says.

 “The last two years the U.S. has had short corn crops. Historically, short crops peak in price early and have a long tail,” Brock says.

Short crops almost always peak before, during or just after corn harvest. As evidence, the economist points out that the highest corn prices over the past 6-7 months came in September.

Prices for 2011 corn may stay around $5 a bushel, Brock says. However, 2012 corn and beyond will more likely be closer to $4 a bushel, maybe even lower, if certain supply and demand factors fall in line.

Prices for 2012 soybeans should climb to above $13 per bushel and level off in the $13.25-$13.50 range. “Holding beans until we get in that $13.25-$13.50 range seems like a good strategy to me, “Brock says.