Corn Supply Will Be Limited, Focus Now on Demand

May 27, 2011 07:02 PM
 
soybeans flooded out

There is now no question corn acres will be limited this year, and so will supplies. Lower export demand and hopes for a big Eastern European crop are now the focus. 

 

How much more troublesome can the corn supply situation get? With already short supplies, the prevented planting date has come and gone in North Dakota. The June 5 deadline in much of the Midwest is fast approaching. Despite the outlook for hot and dry weather to the Eastern Corn Belt for next week, soils are saturated and the time to plant corn is simply running out, says Jerry Gulke president of The Gulke Group

"You have a chance now to gap higher. If it’s raining hard and it’s not as dry as the forecasts, maybe we gap higher in the next seven days. Then maybe we do gap higher and we move to that next level. Then we have to start looking at how much demand destruction are we going to have if we do that. That’s the other thing that’s sneaking up behind us that nobody is talking about."

To contact The Gulke Group, visit www.gulkegroup.com.

Gulke says many people are talking about the potential panic from fewer available bushels, but he says it’s too early to let that panic mode set in. USDA projections are already for 1.8 bill. bu. of exports, compared to the 1.95 bill. bu. this year. Also, Eastern Europe had a dismal crop last summer, which created much of the situation we are currently experiencing. A rebound in production is still possible there.

"You have to look at what we’ll do from an export, feed usage and ethanol aspect. Livestock soybean crush has fallen off the face of the earth. The consumer demand is not great for meat right now. You don’t have to cut consumption off very far to solve the problem. In 1996 we took 10% off of consumption. We took 500,000 million bu. of feed demand for corn in the final quarter of the year."

There are several options available for farmers who take prevented planting. In many cases, any crop won’t be planted. That is the most popular option. In other cases, farmers have the option of taking 35% prevented planting option and planting another crop. (Click here to read The Gulke Group blog on these options.)

"The obstacle in taking prevented planting is mindset. Some of the older farmer think it’s wrong to take it. You have to go through the math with them and show them that you are expecting 30 bu. less than you would if you planted normally. Pretty soon you have a price and/or a yield that maybe you can arrive at and you may as well take prevent planting." 

 

Back to news

Comments

 

Rate this News Article:

Spell Check

No comments have been posted to this News Article

Close