Corn Market Won't Find Its Knight in Shining Armor

December 9, 2013 09:00 AM
Corn Market Won't Find Its Knight in Shining Armor

Here’s a message for producers who have become comfortable with corn demand in the past decade: It’s over, says Bob Utteback, Utterback Marketing Services.

"From about 2002 to 2012, we’ve had a constant growth in demand every year, and we’ve been seduced by that," Utterback tells the U.S. Farm Report Market Roundtable taped recently at the BASF Innovation Symposium in Las Vegas. " But now we’re going to go back to flatter domestic demand curve and the variable will be in the exports. Much like in the ‘70s and the ‘80s, demand will be a function of weather, and if China has good crops and we have good crops, there’s not going to be a demand knight in shining armor to come rescue the markets."

Having said that, corn producers will enjoy opportunities in the form of feed usage for livestock, Utterback says. It just might take a while.

"We’re going to see some expansion in the hogs someday out here, but litter size is being affected by disease, we’ve had some problems there. The cattle producers, they’re not terribly excited. We know that the hog-corn ratios and the cattle-corn ratios are getting to levels where you’re going to motivate. But I think it’ll be the latter part of ’14 into ’15."

As with feed usage, China also will continue supplementing demand, says Gregg Hunt, Archer Financial Services. But levels will be tied to changing government policies about genetically modified crops.

"They’re coming to the conclusion that they’re going to be able to import corn over time, but they’re going to start up their own GMOs in a big way," Hunt explains. "The government has come on national TV in the last couple of months and flipped that deal around and started to tell the people, ‘We like GMOs now,’ contrary to this cargo being embargoed."

Click the play button below to watch the complete U.S. Farm Report Market Roundtable:

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