Livestock and dairy producers face higher feed costs following the government’s lower than expected corn acreage and inventory estimates sent corn futures higher. Farmers nationwide planted an estimated 87.872 million acres to corn this spring, down 926,000 acres from a March projection, reports USDA.
While corn plantings are still expected to be up 1.6 percent from 2009, and the third-highest since the end of World War II, supplies may not be as abundant as projected earlier this year, analysts said.
USDA’s acreage figure was about 1.4 million acres below analysts’ expectations, sending corn futures up the daily 30-cent limit. “Corn prices are likely to be higher in six months than they are now,” says Sid Love, an analyst with Kropf & Love Consulting in Overland Park, Kan. The reports “indicate feed costs are likely to rise between now and a year from now.”
In early trading today, corn for July delivery rose 29 1/4 cents to $3.54 1/4 a bushel, after falling yesterday to a contract low at $3.24 1/2. December corn rose 29 1/2 cents to $3.73 1/2.
The drop in corn plantings partly reflects excessively wet conditions in the northern Midwest that delayed fieldwork, prompting some farmers to shift corn intentions over to soybeans, Love notes. Soybean prices at historically high levels, above $9 a bushel, may also have contributed to a shift.
Farmers planted a record 78.868 million acres to soybeans this year, USDA reports, up 770,000 acres from March’s projection, and up 1.417 million acres, or 1.8 percent, from 2009.
USDA’s quarterly Grain Stocks Report, also released today, carried additional surprises.
Nationwide, June 1 corn supplies totaled 4.31 billion bushels, USDA reports. While stocks were up 1.2 percent from the same date a year earlier, the figure was 250 million to 300 million bushels below trade expectations, Love says.
“Corn stocks were surprisingly low,” possibly because of greater than expected feed use,” he notes. Of course, exports also have been moving well.
Corn prices and supplies will hinge largely on Midwest weather through the summer, and growing conditions have been mostly favorable so far. Farmers could post record corn yields if favorable weather continues, offsetting lower than expected plantings and supplies. Last year, corn yields averaged 164.7 bushels an acre, an all-time high.
How high corn prices climb “depends on what yield is,” Love says. “Weather looks like it’s going to be pretty benign rolling into pollination. On balance, conditions indicate we could have a record yield,” at around 165 bushels to 167 bushels per acre.
Strong yields may boost corn harvest to a record near 13.4 billion to 13.5 billion bushels, “so we still could have plenty of corn,” Love adds. “It’s not a question of running out of corn.”
In early trading, July lean hog futures rose 0.457 cent to 79.225 cents a pound. August live cattle rose 1.275 cent to 90.025 cents a pound.