Corn Demand May Be Back

October 14, 2011 07:16 PM

Corn is looking more attractive to livestock feeders at $6/bu.


Jerry Gulke is seeing from his own fields as he takes his combine across the northern Illinois fields this week. Farmers are across the country are seeing the same thing. As harvest rolls along, corn yields are coming in a little better than many people believed they would be before the harvest season began.
This year’s harvest seems to be lagging a little behind last year, at least in this week’s USDA Crop Production Report. "Well over half of the yields aren’t in yet. As you go from northern Illinois and north, you hear yields are better," says the president of The Gulke Group
With that information, Gulke was a little surprised that yields didn’t actually go higher in the report. By the end of the year, he expects to see USDA’s national yield eclipse 150 bu./acre.
Soybeans are much the same story. Anecdotal reports from his clients are coming in higher than expected.
The surprise this week was in the WASDE Report. "The government lowered the amount of wheat they expect to fed. And we didn’t feed as much corn either. So what did we feed?
"We have a lot of hogs out there. We have a record amount of cattle this fall. So I called some of my clients who run feed mills, in California especially, and they told me people were blending wheat a lot earlier than anybody expected here in the Midwest. They told me people are starting to lock in corn and they’ll blend wheat through this fall. Anything after the first of the year, they’re switching back to corn again."
In Gulke’s mind, this means the free market worked. When corn prices were near $8/bu. it slowed demand enough to bring supplies to a management level for end users.
With hog prices at very profitable levels, which could bring more demand for corn from a larger hog herd. 


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