Corn Loses its Luster

October 9, 2009 04:43 PM

Corn is like the Tiger Woods of field crops. When Tiger misses a tournament cut, he's still the story. Meanwhile, soybeans and cotton are in Sunday's final group and the gallery is missing.

An e-mail survey of more than 300 Top Producer readers from Sept. 10 to Sept. 21, 2009, shows corn is on the bubble. The respondents indicate they will plant 7% more acres to soybeans and 3% fewer corn acres, for the time being anyway.
Down South, cotton may again rule Dixie, if acres rise the projected 7%. Corn looks to drop almost 7%.

Jerry Gulke, president of Strategic Marketing Services, is not surprised: "Coming off the high yields we expect this year, these low prices may come home to roost."

While only 4% are less than 50% sure of their crop mix, Gulke believes the average February price will drive decisions. Only 14% say they are totally committed to these plans. "With our cash flows, $3/bu. December 2010 corn may be all we need to keep acres from slipping too far," Gulke says.

"I think we'll see somewhat fewer corn acres," says Richard Brock of Richard Brock and Associates. "At current price relationships, some growers will revolt at seed prices that are going to rise again.

"This may be the first year growers see the soybean yields that new seed technology will deliver going forward," he adds. "That will make beans more competitive with corn."

Pro Farmer Editor Chip Flory believes market adjustments will eventually favor corn over soybeans because consumption is stabilizing. "Our supply and demand scenarios for 2009–10 show there's not much difference in corn carryover—just 200 million bushels from high to low yield. Even with minor differences in carryover, there's plenty of potential volatility," he says. "We see a $1 difference between the highest and lowest scenario. The lower price will encourage more use—holding down carryover—while the highest price would slow down use—propping up carryover."

Gulke projects a 13-billion-bushel corn consumption this marketing year. At that rate, we are consuming all we can produce of this year's projected 12.95-billion-bushel crop. "We can't stand a poor crop next year and a reduction of 2 to 3 million acres because of continued increases in usage," he says.

Click here for a table showing Pro Farmer 2009–2010 Marketing Year Projections

Top Producer, October 2009

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