The second ear of corn emerging on stalks across Pat Solon’s 1,600-acre farm in Illinois is the latest sign that the U.S. crop this year will be a bin-buster.
"It’s the healthiest crop I’ve ever grown," Solon, 50, said from his farm in Streator, Illinois. Two months before the harvest, stalks exceed 10 feet (3 meters), with deep roots and ample soil moisture. "It’s been a great growing season."
This year’s bumper corn crop is so unusual, Solon predicts he’ll yield 250 bushels an acre, 24 percent more than the average over the past decade. Iowa, the biggest corn-growing state, probably will produce as much as 2.8 billion bushels, topping the all-time high from 2009, Agriculture Secretary Bill Northey said. U.S. production will set a new record of 14.5 billion bushels in 2014, AgResource Co. estimates.
Two years after the worst U.S. drought in a century cut output and sent prices to the highest ever, rain and milder weather of the past two months are creating ideal growing conditions. That’s caused prices to tumble and costs to fall for buyers including Tyson Foods Inc., while it has reduced returns for growers to a four-decade low, a threat to the 12-year jump in farmland values.
"I don’t know how much better the crop can get," Paul Christopher, the chief international strategist at Wells Fargo Advisors LLC, which manages $1.3 trillion, said by telephone from St. Louis yesterday. "We will have a supply surplus this year. The price trend is lower for the next six to 12 months."
Corn plunged 14 percent in July on the Chicago Board of Trade, the biggest monthly drop since September 2011, and traded at $3.6725 a bushel at 11:48 a.m. in Singapore. The Bloomberg Spot Commodity Index of 22 raw materials fell 5 percent last month, while the MSCI All-Country World Index lost 1.3 percent. Bloomberg’s Treasury Bond Index slid 0.1 percent.
As recently as July 11, the U.S. Department of Agriculture was expecting output to fall 0.5 percent from last year’s record harvest to 13.86 billion bushels, as a 4 percent drop in planted acres eroded the benefit of record yields forecast at 165.3 bushels an acre.
Crop conditions are the best in a decade for this time of year, government data show, with 75 percent rated good or excellent as of July 27. The USDA probably will boost its production estimate in its monthly crop report on Aug. 12, said The Linn Group, a broker and adviser. The U.S. is the world’s largest grower and exporter.
"There will not be enough storage space for all the extra bushels this fall," said Roy Huckabay, an executive vice president at The Linn Group in Chicago. He predicted on July 1 that the crop would increase 2.8 percent to 14.314 billion bushels with yields around 170 bushels an acre.
A prolonged dry spell, damaging winds or early frost could hurt crops before the harvest, which usually doesn’t start in the Midwest until late September. Low prices also are encouraging more demand from livestock producers that reduced their herds after a 2012 drought cut output and sent futures to a record $8.49.