USDA is still predicting a record corn crop for 2013. Jerry Gulke analyzes the May 10 World Agricultural Supply and Demand Estimates.
While 2013 is already grabbing headlines for being one of the slowest planting years on record, that title doesn't reflect another important fact: 2013 could also see the biggest corn crop ever.
Prior to the release of the May 10 World Agricultural Supply and Demand Estimates, many traders were expecting USDA to lower the national corn yield estimate, based on slow planting.
As of May 5, USDA reports 12% of the crop was in the ground, which is drastically behind the 56% average of the previous five years.
USDA did lower yields to 158 bu. per acre, a significant 5.6-bushel reduction from the agency’s February estimate. Yet even with this yield drop, 2013 is projected to produce the largest crop ever, if USDA’s estimate of 96.5 million planted corn acres is realized.
Jerry Gulke, president of the Gulke Group, says he expected a yield drop based on previous reports. "USDA uses a formula. They like to see 40% of the crop planted by May 5. If it’s not, they say it is very difficult to get a trend-line yield."
He says the acreage expectations will stay the same until they resurvey farmers next month.
In the report, USDA projects the season-average farm price at $4.30 to $5.10 per bushel. Immediately following the reports, the corn market receded.
Gulke says because demand was reduced so much from last year’s short crop, prices will have to go lower to buy back those customers.
"We’re going to do our best to get demand back," he says. You aren’t going to buy demand back with $6 or $7 corn. It is going to be $4 or maybe $3.50 corn."
Gulke, who farms himself, understands the uncertainty and uneasiness farmers are feeling about this record-slow planting season. But, he sees a few upsides.
First of all, even if corn acres are reduced and yields decrease further, demand can still be met. "You could lower the actual planted acres down to 94 million acres and have a 150-bushel average and still have enough."