What is in this article?:
- New-crop corn prices may have established low prior to harvest
- Estimate may vary
• Recent developments suggest that new-crop corn prices may have established a low before harvest.
• At least, the extreme lows which have been reflected in some private forecasts now seem unlikely.
• The Sept. 12 USDA Crop Production Report looms as very important for price direction.
According to an agricultural economist, corn prices during this time of year are usually dominated by yield prospects of the U.S. crop with prospects pretty well settled.
This year, there is a lot of uncertainty about production prospects as well as changing projections of corn consumption numbers.
“Production uncertainty stems from both acreage and yield considerations,” explained Darrel Good, University of Illinois.
“For acreage, the USDA’s National Agricultural Statistics Service (NASS) currently estimates planted acreage at 97.379 million acres. The Farm Service Agency report of prevented acreage released last week indicated prevented corn acreage of 3.411 million acres.
“The estimate exceeded expectations and resulted in speculation that the NASS estimate might eventually be reduced. However, there has not been a close relationship between prevented acres and the change in the NASS estimate of planted acres from June to the final estimate.
“In 2010, for example, 2.1 million corn acres were reported as prevented, but the NASS final estimate of planted acres exceeded the June estimate by 320,000.
“In 2011, prevented acres totaled 3.01 million, yet the final NASS estimate of planted acres was only 346,000 less than the June estimate,” he said.
Beyond planted acreage, there is some uncertainty about potential acreage harvested for grain.
“While some insist on analyzing acreage harvested for grain as a percentage of acreage planted for all purposes, the nominal difference between the two is more informative,” Good said.
Good said that the difference rather than the ratio is more informative because acreage harvested for silage is nearly constant in years with good growing conditions (varied by only 400,000 acres from 2008 through 2010) while changes in planted acreage are motivated by demand for grain.
The difference between planted acreage and acreage harvested for grain averaged only 6.8 million acres in 2009 and 2010, about 400,000 less than the previous five-year average. The difference increased to 7.95 million in 2011 and 9.78 million in 2012 as poor weather resulted in more acres harvested for silage or abandoned.