After we spent last summer concerned with a corn shortage, and every major weather event had people in a panic that we would run out of food, the crop has taken taken a dip on the commodity roller coaster. Due to falling demand, farmers are planning on planting less corn and more soybeans this season. Bloomberg has more:
Farmers are planting more soybeans because they cost about 32 percent less to raise than corn, according to a University of Illinois study. Informa Economics, a private forecaster in Memphis, Tennessee, told clients on March 13 that soybean acres may exceed corn for the first time ever.
Analysts in the Bloomberg survey on average expected farmers to plant soybeans on 79.11 million acres, up from 75.72 million last year. The increase is equal to the state of Connecticut, plus 279 square miles.
To make room, growers probably will use less land for corn, the most-valuable U.S. crop. Planting will drop to 84.7 million acres from almost 86 million last year, the Bloomberg survey shows. Corn stockpiles at the beginning of March probably totaled 7.012 billion bushels, up 2.2 percent from a year earlier and the highest for that date since 1988, analysts in the survey said.
Naturally any talk of less corn prompted futures to rise. From the WVGazatte.com:
May corn added 8.5 cents to $4.045 a bushel and May soybeans leaped 29 cents to $9.81.
Those prices are still much lower than they were last year, and farmers are feeling the hit in the sagging prices. Also from Bloomberg:
Patrick Solon, 45, who farms corn and beans on 1,200 acres near Streator, in northern Illinois, said his costs for seed, fertilizer and machinery will jump at least 25 percent this year. He plans to plant 720 acres of corn, down 14 percent from about 840 last year.
“My income is going to fall this year and I’m putting aside some of last year’s profit for next year,” Solon said by telephone.
But some argue that the decline is more of a balancing out of the industry:
“Farm income has to come down,” said Michael Swanson, a senior agricultural economist at Wells Fargo & Co. in Minneapolis. “We don’t need any more wheat, soybeans or cotton, and corn supplies should be adequate with the drop in demand.”
The consensus seems to be that barring any major weather catastrophes, we have enough corn. We will have to wait and see if this translates into lower food prices.
Further Reading:
Des Moines Register on the impact of corn prices in Iowa.
The Capital Times on less corn being planted.
Recordnet.com on an ethanol company running out of cash.
