More Corn, Lower Prices in USDA Outlook

February 27, 2012

By: Roy Leidahl

The corn market is working. Expect record-high corn prices in 2011-12 to drive corn acreage and production to record highs this year.

And look for prices to drop but stay historically strong as domestic feed demand climbs.

Corn growers likely will plant 94 million acres this year, according to estimates presented by Economic Research Service economist Ed Allen at USDA's Agricultural Outlook Forum. That figure is in line with what many private analysts have been projecting.

However, analysts don't all agree.

"I think the corn number is high and the bean number is high," says Tim Hannagan, analyst at PFGBest, Chicago. He also thinks index funds and merchants expect this year's corn acreage will not climb as much as USDA projects.

Hannagan says crop rotation is more important to growers than USDA's numbers suggest.

"When you ask them, 'What do you think your most valuable crop is,' the farmers always say, 'That's easy. My land. I take care of the land and it takes care of me.'"

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RELATED TOPICS: Corn, Marketing, Crops, USDA, Analysis

COMMENTS (7 Comments)

FG - cuba, IL
Steve the hay farmer,

You may have a good point or you may not.

If prices and rents come down that only means the price of the product has really gone down. That is not good for the young farmer either. Unless, of course, he negotiates a great land price deal after things have fallen and then everything starts rising rather quickly again.

A dream scenario for some but how likely is all of that.
2:56 PM Feb 26th

gibby - WI
Its time to just stop looking out your back door and pay attention to what is happening around the world.High prices have already increased world wide production and we will not be the only ones to have goods to sell on to importers of grain including China.
10:46 AM Feb 26th

FG - cuba, IL
The USDA could be correct as even a stopped clock is right twice a day.

But their overall goal is lower prices. Remember the floods in 1993. The USDA kept saying that production would be high when millions of acres were being flooded.

Most sold that Summer because of the forcecasts and once that happened- gee the USDA figured out that about the floods, lowered estaimtes and prices went much hgiher. But too late for many farmers.

Never trust the USDA!!!
6:49 PM Feb 25th

PullMyFinger - Chappell, NE
USDA has always done all it can to promote 18th century grain prices. What's new?
10:25 AM Feb 25th

Steve the hay farmer
Finally we can see a light at the end of the tunnel. This high corn prices just drove rents and land to ridiculus levels. A lot of young tigers are probably puckering up thier backsides after this forum. The Eighties ar eupon us again.
6:31 AM Feb 25th

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