Record corn prices projected for US farmers
Wednesday, June 8, 2011
by BETTER FARMING STAFF
The United States of Department of Agriculture (USDA) world agricultural supply and demand estimates, released June 9, project record corn prices for U.S. farmers for 2011/12 at $6 to $7 a bushel, up 50 cents at both ends of the range although lower than the actual price of corn in the U.S. today, which is at $8 plus. Today’s elevator price in Canada is $7.95 for old crop corn.
Dave Gordon, manager of corn merchandizing for London Agricultural Commodities Inc., predicts corn usage will be reduced putting downward pressure on the price. “The old crop prices are maybe heading into a blowoff stage,” he said, “which will severely ration usage.” He said that rationing could lead to reduced exports and a reduction in ethanol production until prices come down.
USDA farm price projections for other feed grains are also higher. At the same time, the USDA is projecting record corn production of 13.2 billion bushels, up 753 million bushels from 2010/11 in spite of planting delays in the eastern corn belt and northern plains.
The USDA report notes European Union barley production is down 2.2 million tons because prolonged dryness across western and northern Europe has sharply reduced yield prospects.
Wheat production for 2011/12 in the United States is forecast at 2,058 million bushels, 15 million bushels higher than last month’s projection. World wheat production is projected 5.2 million tons lower for 2011/12. At 664.3 million tons, production would be the third highest on record and up 16.1 million from 2010/11. This month’s reduction for 2011/12 mostly reflects a 7.1-million-ton decrease for European Union wheat output. (A ton equals 907.18474 kilograms; a tonne equals 1,000 kg). Persistent dryness, particularly in France, but also in Germany, the United Kingdom, and western Poland, has reduced yield prospects. Production is also reduced one million tons for Canada as flooding and excessive rainfall, particularly in southeastern Saskatchewan and adjoining areas of Manitoba, are expected to reduce spring wheat seeding.
Although adverse weather has slowed U.S. soybean planting progress this year, area and production estimates are unchanged with several weeks remaining in the planting season. Higher beginning stocks reflect a lower export projection for 2010/11. Soybean exports for 2010/11 are reduced 10 million bushels to 1.54 billion bushels reflecting the export pace to date for the marketing year and reduced global import demand, led mainly by lower projected imports for China.
Soybean, meal, and oil prices are all raised this month. Led by higher corn prices, the U.S. season-average soybean price for 2011/12 is projected at $13 to $15 per bushel, up $1 on both ends of the range.
The forecast for 2011 total U.S. meat production is raised from last month reflecting higher beef production. Large cattle placements and larger cow slaughter, due in part to drought in the southern plains, is reflected in an increase in the beef production forecast. However, forecasts for pork and poultry are reduced from last month as higher forecast grain prices are expected to trim hog weight gains and put additional pressure on broiler producers.
Dairy product price forecasts in the United States are raised from last month. Butter supplies are tight and demand for cheese, nonfat dry milk, and whey are expected to support product prices.
On June 8, Canada downgraded its grain stocks to a record low. They are expected to fall below 10 million tonnes for the first time in recorded history. Agriculture and Agri-Food Canada slashed nearly 900,000 tonnes from its forecast for total inventories of the likes of barley, canola and wheat at the close of 2011-12, reducing the estimate to 9.46 million tonnes, 26 per cent below the 10 year average. BF