What is in this article?:
- If youâ€™re planting corn. hopefully you have it sold
- The real story
• If you're planting a lot of corn this spring, make sure you have a good price for it, grain marketer Richard Brock says. Prices could take a big tumble by harvest on a big crop and lagging demand.
If you’ve switched much of your cotton acreage over to corn this season, and you’ve sold corn, you’re probably in good shape going into harvest next fall, according to Richard Brock, with Brock Associates, a speaker at the Mid-South Farm and Gin Show.
“But it may not be worth a hoot if you didn’t (sell corn). I think some of you may have wished you would’ve stayed with cotton.” Brock’s comments came as cotton prices were beginning a surge from the mid-80s to the high-80s, and corn prices for 2013 around $6.
Brock based his comments on the possibility of a break in corn prices due to falling demand and a U.S. corn crop that is looming large.
“Two things have happened in the last two years that people in this room are going to live to regret – $2 cotton and $7.50 corn. This has changed the structure of both markets. We lost demand. Once you lose demand, it’s a 5-year to 10-year period to get that back. You have to keep prices low for a long time.”
Behind the currently high price for corn was last year’s disastrous U.S. corn crop, says Brock. “Corn producers planted 97.2 million acres of corn in 2012, but only harvested an average of 123.4 bushels, a significant drop from the 2011 average of nearly 148 bushels, (which in itself was a below trend line yield). Corn’s stocks-to-use ratio dropped from 7.9 percent to 5.6 percent.”
As a result, corn prices took off and demand took a holiday.
USDA estimates that for the current marketing year, total corn use will have dropped from 12.5 billion bushels in 2011-12 to 11.2 billion bushels in 2012-13, due mostly to a 643 million bushel decline in exports, from 1.543 billion bushels to 900 million bushels. Brock still isn’t sure whether the latter estimate is even attainable. “That’s what $7.50 corn will do.”