If weather does an about-face and approaches normal this year throughout the Corn Belt, some believe rising surpluses could send corn prices almost $1 lower.
"We’re going to $3.50 corn," says Dan Basse, president of AgResource Co. He believes that soybean prices could drop to $9 per bushel.
However, that’s not his worst-case scenario. With normal weather, corn prices by 2015/16 could reach levels as low as $3.25, and with good weather, possibly $2.75. But Basse is not all bearish. By 2018/19, he expects corn prices to rebound to current levels. Basse believes the recovery will largely occur because bearish commodity prices will force a 20- to 24-million acre cutback in the U.S. for all crops.
Other analysts have a different perspective. "I think $4 per bushel is about the bottom," says Thomas Elam, president of FarmEcon LLC. Elam does not see a major cutback in corn acres in 2014 the way some do—in part because of the 8.3 million prevent-plant acres last year and 1.4 million acres in the CRP that is coming back into production.
But Basse has two concerns. One is U.S. export market share, which continues downward. "We have lots of new global capacity, an additional 167 million acres," he says. Equally sobering is that the U.S. is no longer the world’s lowest-cost corn producer.
Despite political problems, Ukraine holds that spot with production costs averaging about $2.40 per bushel, Basse estimates. It’s not that farmers in Ukraine are managing costs and inputs better, but that they have far lower land costs.