Corn prices are likely to be lower, though still strong, in 2012, according to a forecast of commodity prices by Rabo AgriFinance. "We expect a seasonal uptick in prices, averaging $6.45 per bushel in the second quarter 2012, before easing to $6.10 in the fourth quarter," according to the bank’s report Outlook 2012—Down, But Not Out. The softening will be due to more corn acres; however, the bank’s forecast for 2011/12 ending stocks-to-use ratio would be the lowest on record and provide strong price support in the near term.
Speculative/managed money in corn markets will play an important role in price discovery in 2012, the report says. Current net long positions of managed money are near the lows set in July 2010 and it might be difficult for significant liquidations in speculative net long positions to occur from these levels, as structural longs remain. Analysis of origin buying suggests a price floor of about $6 will hold until 2012/13 crop acreage and conditions are established.
Rabo suggests that a majority of the 1.7 million planted acreage increase in 2012 will come from nontraditional producer states. In total, 93.5 million acres will be planted to corn in the U.S., displacing soybean acres, which Rabo forecasts to fall to a five-year low.
A record 5.1 billion bushels of corn will be used in ethanol production in 2011/12 as distillers operate at full pace despite the withdrawal of the blenders’ credit. Feed demand will increase to 4.7 billion bushels.
Rabo forecasts 2012/13 global corn production of 885 million tons, a 3.4% increase from 2011/12 and the highest on record.