Corn Stocks Decline, Prices Rise

January 17, 2007 — 

The USDA lowered its estimates for the 2006 corn harvest by 210 million bushels in its latest supply and demand report released on January 12. Futures prices responded by pushing July prices to over $4.00 per bushel.

The report lowered harvested acres from 71 million to 70.4 million acres and decreased yields from 151.2 to 149.1 bushels per acre. This, combined with a 50 million bushel increase in exports, resulted in ending stocks projected to be the lowest since 1996-97 at 752 million bushels.

The increased demand is going to result in significant increases in acreage devoted to corn in the 2009 marketing year, according to Dale Durchholz, an analyst with Bloomington, Ill.-based AgriVisor Services. "We'll reach 2.15 to 2.2 billion bushels this year, but its going to reach 3.7 billion, perhaps 4 billion next year," he says. That won't help the meat industry, though, because nearly all of that increase will go to the ethanol industry. He estimates the price may top $5 a bushel eventually, as increased demand worldwide as well as from the ethanol industry continue to push prices up.

Sources:
Daily Livestock Report
Meatingplace.com