Corn prices could forge a rally in the months ahead as the market works to secure sufficient corn acreage in 2016, according to some analysts.
Ted Seifried of Zaner Ag posed one scenario on a recent broadcast of U.S. Farm Report where corn prices could rally in the near future to attract more acreage away from soybeans.
“We have the second highest [corn] yield we have ever seen, according to the USDA, yet we have a decline in carryover. So, what were to happen if we were to have a mediocre year or a little bit of a problem with our growing season? We could be in a very tight situation for corn pretty quickly,” Seifried said. “This is the year corn is going to need to kind of pry some of those acres back out away from soybeans.”
He added that the acreage battle is most likely to happen in the northern Corn Belt.
“Take North Dakota, for example. That (state) has lost about a million and a half acres of corn in the last two years, and to get those acres back up there, I think you’re going to need to see $4.25 to $4.40 to $4.50 corn,” he said.
Listen to their discussion on the Oct. 17 U.S. Farm Report broadcast:
Listen to their additional comments on acreage here:
Mike North of Commodity Risk Management agreed an acreage battle will play out, but he said that a significant rally in corn prices might not be required. Instead, he suggested that depressed soybean prices due to higher U.S. bean yields and favorable South American growing conditions could also send more acres to corn next spring.
“If bean prices are heavily under attack, it doesn’t take a big corn price to buy acres,” North said. “Four-dollar [corn] on the board right now might look really attractive if beans are $7.50 or $8.”
Corn’s significant yield advantage over soybeans, he added, gives farmers an added incentive to increase corn acres with even minor rallies in corn prices.
“Budgets change a lot when you get a little extra yield, and corn is generally more known for that than soybeans are,” North explained. “And, I think that’s where the grab gets made.”
What are your plans for acreage next spring? Tell us more at Crop Comments.