Is $4 corn possible in 2013?

By Dave Natzke


Absent of another drought, dairy producers can look forward to moderating feed prices, two ag finance specialists told participants at the National Milk Producers Federation’s (NMPF) National Dairy Producers Conference, April 9, in Indianapolis, Ind. 

"If we had a good crop year this year, I would not be surprised to see corn go sub-$4/bushel,” said Leland Strom, chair and CEO of the Farm Credit Administration board and a board member of the Farm Credit System Insurance Corp. 

He noted that the Renewable Fuels Standard had changed the landscape of livestock agriculture, at the same time U.S. corn production had three consecutive years (2010-2012) below trend. However, that could change. Thanks to higher fuel efficiency standards for automobiles, U.S. gasoline consumption is likely peaking, Strom said. Without an increase in the ethanol "blend wall,” future growth of ethanol production will be limited.

“Things are lining up to be a bin buster,” said Sam MIller, managing director of ag banking for DMO Harris, the eighth largest agricultural bank in the United States. While he said corn could approach $4/bushel, he adds a caveat: “You could have said the same thing a year ago at this time. There's a long way to go between now and harvest.”

”Heat and drought turned 2012 from a milk price problem to a feed price problem,” Miller said. “We were on the three-year price cycle, but heat and drought changed things.”

Meanwhile, Chris Hurt, Purdue ag economist, told conference attendees the impact of the past three years of below-trend corn production, combined with federal renewable fuel policy, could finally come to an end. In addition, he projects a slowdown in corn demand from China.

Hurt forecasts corn futures prices in the $4.50-$5.50/bushel range for 2013-2016, with soybean meal averaging about $350/ton over the same period. When corn and soybean prices moderate, crop acreage shifts to other crops, which also could help moderate alfalfa hay prices, he added.

Historically, Hurt said, every corn demand surge has been met by a production/supply surge.