Early focus on the prospective 2013 U.S. corn crop size
Corn prices have generally followed the expected short-crop pattern – "short crops have long tails" – as consumption and supply responses continue to unfold, according to Darrel Good, University of Illinois ag economist.
The 2012-13 marketing year pace of consumption has been slower than that of last year, but modest, coming primarily in the export market and in the production of ethanol, rather than in the domestic feed market as earlier expected. Other elements contributing to the price decline are clearly occurring. In addition to a slowdown in consumption of U.S. corn, USDA projects another large corn harvest in Brazil and a rebound in production in Argentina.
Then, there’s anticipation of a large 2013 U.S. crop. Planted acreage of 99 million would point to acreage harvested for grain near 91.5 million acres under non-drought conditions, Good said. Such acreage would point to prospects for an extremely large crop in 2013. Factors impacting yield projections remain to be determined, including extension of or recovery from 2012’s drought conditions.
While prices for the 2013 corn crop are currently about 70¢ below the peak reached in September 2012, they are well above the level that would be expected if the 2013 crop reached its full potential. Next month, USDA will release projections for the U.S. farm sector for the next 10 years. There will be a lot of interest in the 2013 corn acreage and yield projections contained in that report.