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2014 Outlook: Prepare for a Stagnant Corn Market

November 4, 2013
By: Jen Russell, AgWeb.com Managing Editor google + 
Corn with husk
  
 
 

Editor's note: Over the next six weeks, AgWeb will present 2014 marketing outlooks for all of the major commodity markets. Please check back each Monday for outlooks on beef, wheat, hogs, soybean, cotton and dairy.


Is there any hope for corn prices next year? Market analysts Bob Utterback and Greg Wagner offer their thoughts on five wild cards to watch.

After the historic drought of 2012 destroyed much of the U.S. corn crop, many farmers turned the calendar to 2013 with hopes for a fresh start. The results this year were mixed. Some farmers experienced nearly ideal growing conditions and reported some of their best yields ever.

Others weren’t so lucky. An extremely wet planting season prompted a late-planted crop and roughly 7.7 million prevented planting acres. Many fields that did get planted were later plagued by hot, dry conditions. Iowa, the nation’s top corn-producing state, was one of the hardest hit areas.

However, USDA still predicted a record corn crop this year at 97.4 million planted acres, causing corn prices to tumble to the $4-$5 range, and they have struggled to rally ever since.

So what should farmers expect from 2014? Bob Utterback, president of Utterback Marketing and Farm Journal economist, and Greg Wagner, president of GWX-Ag Advisors and AgWeb markets analyst, offer their thoughts on five hot topics for next year’s market.

1. Acreage

In its September World Agricultural Supply and Demand Estimates, USDA predicted that 89.1 million acres of corn would be harvested this year, down 8.3 million from its June planted acreage estimate. With corn prices struggling, will farmers stick with corn next year?

"I think on the surface, the answer is always that there will be some adjustment. The question is which direction?" Utterback says.

Current talk in the trade is that more than 4 million corn acres will be lost, but Utterback is skeptical of that number. He predicts that initially, about 3 million to 4 million acres will be lost, but those will occur in lower-production regions.

Wagner agrees.

"There’s no question that there are widespread expectations that there will be a reduction in corn acreage and an increase in soybean acreage," Wagner says, "and it is my humble opinion that the corn acreage reduction will not be nearly as dramatic as some are forecasting."

His estimate is even more conservative: He predicts a reduction of just 1 million to 1.5 million acres.

2. Weather

From an extremely wet year in 2011 to extremely dry in 2012, to a year with both conditions in 2013, farmers are getting used to crazy weather. So how will weather affect the 2014 market?

"Only God knows," Wagner says. "There’s nothing to suggest at this juncture that there is any macro-weather force (such as El Nino or La Nina) that will adversely impact the U.S. crop next year."

However, Utterback says that the lack of a major weather event could be a major problem for corn prices.

"If Mother Nature rewards us with a good-yielding year, we’re going to be in the sewer next fall," Utterback says.

With corn prices as low as they are currently, many farmers are opting to store their crop, which could lead up to an oversupply if next year’s yields are strong.

"If we don’t have a bear market in 2014, it’s because of weather," Utterback says. "The only way we’re going to have $5-$6 corn, is if we have a 2012-type drought event."

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