Corn Market Still Whirling from Reports

July 1, 2011 09:22 PM
 

The numbers released by USDA yesterday have raised a lot of eyebrows. Here’s what they mean for farmers.

 
USDA rocked the markets yesterday by projecting U.S. farmers have planted 92.3 million corn acres this year. This year’s projected corn acreage is 5% more than last year and the second highest planted acreage since 1944, behind only 2007’s 93.5 million acres.
 
The increase in corn acres equaled a decrease in soybean acres. U.S. soybean growers planted 2.2 million fewer acres than last year. A total of 75.2 million acres have been planted to soybeans in 2011, the lowest since 2007.
 
With the recent weather severities that produced major planting delays and complications, the market raised its eyebrows at the data. (See all of AgWeb's June report data and analysis.)
 
So, what does this data really mean for farmers? 
 
“The farmer has the best pulse on what is really happening in the field,” says Allendale’s Bill Biedermann. “They know that if the USDA missed those facts, farmers are going to hold sales.”
 
Biedermann says if farmers hold off on making cash sales in the next few weeks, he expects USDA will make revisions to yesterday’s numbers.
 

How Much Longer Will Corn Prices Tank?

With the unexpected increase in acreage, many market analysts have predicted corn prices to come under significant pressure. As of Friday, July Corn closed around $6.40, September Corn at just over $6 and December Corn at just under $6.
 
Biedermann says the movement in the markets is largely due to speculative money.
 
Once that gets done, he says, the industry will come in and really determine what’s really happening with supply and demand. “We’ll see some bounces, for sure.”
 
Biedermann says analysts are guessing corn prices could drop down to $5.50 to $5.75.
 

Good News for Livestock

The decline in corn prices was a welcome sight to livestock producers, who had been getting squeezed by the recent high grain prices.
 
“This is actually a healthier environment for agriculture,” Biedermann says. “If we would have gone to $9 or $10 corn like some people we saying, we would have hurt livestock for years.”
 
He says having this pullback could sustain a nice healthy profit for both the livestock and grain producers. “We can survive with both sides making money.”
 
 

For More Information

Listen to Biedermann's complete analysis on AgWeb Radio.

See all of AgWeb's June report data and analysis.


 

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Anonymous
7/2/2011 06:57 AM
 

  There was a time when I thought that the USDA actually did a good job in their sampling. This was brought into question last October when they miscalculated the old crop corn inventory as farmers were blending new crop corn with their damaged old crop. Now they miss again as they come up with planted acres that either are under water, or were still planted well past reasonable planing dates for insurance reasons. The acres may be right, but the yields are grossly over estimated. Harvested acres will not approach the acres estimated. This will changes yields significantly, even if the early corn does well. Their credibility going forward is seriously in question.

 
 
Anonymous
7/2/2011 08:33 AM
 

  I remember the 1993 flood year when USDA refused to recognize the reality of crop loss depressing prices until AFTER the harvest was in. The markets reacted to false data and many farmers lost a bundle. In 1993 were they incompetent or was in part of conspracy to depress prices? It was one or the other! While USDA was willing to give billions to Blakcs for alledged discrimination in loans, they are shall we say, a little less likely to make up for false reports. And no one will be held accountable either. For 2011, we shall see. But the damage to corn markets has been doen for many farmers who do not store corn for a year at a time.

 
 
Anonymous
7/2/2011 08:33 AM
 

  I remember the 1993 flood year when USDA refused to recognize the reality of crop loss depressing prices until AFTER the harvest was in. The markets reacted to false data and many farmers lost a bundle. In 1993 were they incompetent or was in part of conspracy to depress prices? It was one or the other! While USDA was willing to give billions to Blakcs for alledged discrimination in loans, they are shall we say, a little less likely to make up for false reports. And no one will be held accountable either. For 2011, we shall see. But the damage to corn markets has been doen for many farmers who do not store corn for a year at a time.

 
 
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