by BETTER FARMING STAFF
The United States of Department of Agriculture (USDA) world agricultural supply and demand estimates, released June 9, project record corn prices for U.S. farmers for 2011/12 at $6 to $7 a bushel, up 50 cents at both ends of the range although lower than the actual price of corn in the U.S. today, which is at $8 plus. Today’s elevator price in Canada is $7.95 for old crop corn.
Dave Gordon, manager of corn merchandizing for London Agricultural Commodities Inc., predicts corn usage will be reduced putting downward pressure on the price. “The old crop prices are maybe heading into a blowoff stage,” he said, “which will severely ration usage.” He said that rationing could lead to reduced exports and a reduction in ethanol production until prices come down.
USDA farm price projections for other feed grains are also higher. At the same time, the USDA is projecting record corn production of 13.2 billion bushels, up 753 million bushels from 2010/11 in spite of planting delays in the eastern corn belt and northern plains.
The USDA report notes European Union barley production is down 2.2 million tons because prolonged dryness across western and northern Europe has sharply reduced yield prospects.
Wheat production for 2011/12 in the United States is forecast at 2,058 million bushels, 15 million bushels higher than last month’s projection. World wheat production is projected 5.2 million tons lower for 2011/12. At 664.3 million tons, production would be the third highest on record and up 16.1 million from 2010/11. This month’s reduction for 2011/12 mostly reflects a 7.1-million-ton decrease for European Union wheat output. (A ton equals 907.18474 kilograms; a tonne equals 1,000 kg). Persistent dryness, particularly in France, but also in Germany, the United Kingdom, and western Poland, has reduced yield prospects. Production is also reduced one million tons for Canada as flooding and excessive rainfall, particularly in southeastern Saskatchewan and adjoining areas of Manitoba, are expected to reduce spring wheat seeding.
Although adverse weather has slowed U.S. soybean planting progress this year, area and production estimates are unchanged with several weeks remaining in the planting season. Higher beginning stocks reflect a lower export projection for 2010/11. Soybean exports for 2010/11 are reduced 10 million bushels to 1.54 billion bushels reflecting the export pace to date for the marketing year and reduced global import demand, led mainly by lower projected imports for China.
Soybean, meal, and oil prices are all raised this month. Led by higher corn prices, the U.S. season-average soybean price for 2011/12 is projected at $13 to $15 per bushel, up $1 on both ends of the range.
The forecast for 2011 total U.S. meat production is raised from last month reflecting higher beef production. Large cattle placements and larger cow slaughter, due in part to drought in the southern plains, is reflected in an increase in the beef production forecast. However, forecasts for pork and poultry are reduced from last month as higher forecast grain prices are expected to trim hog weight gains and put additional pressure on broiler producers.
Dairy product price forecasts in the United States are raised from last month. Butter supplies are tight and demand for cheese, nonfat dry milk, and whey are expected to support product prices.
On June 8, Canada downgraded its grain stocks to a record low. They are expected to fall below 10 million tonnes for the first time in recorded history. Agriculture and Agri-Food Canada slashed nearly 900,000 tonnes from its forecast for total inventories of the likes of barley, canola and wheat at the close of 2011-12, reducing the estimate to 9.46 million tonnes, 26 per cent below the 10 year average. BF
Comments
Only several months ago, USDA Secretary, Tom Vilsack, vowed there would be enough corn produced in the US in 2011 to meet everyone's needs, and people who (like myself) pointed out that Vilsack's promise was the equivalent of a "Hail Mary" play, were scoffed at, partioularly by ethanol advocates.
However since Vilsack conveniently didn't mention anything about the price at which his elusive definition of "enough" would take place, his "Hail Mary" promise seems even more remote than ever.
Even more poorly-timed was the recent claim by the Grain Farmers of Ontario (GFO) that "the food/fuel debate is over", because, unfortunately for the GFO, the debate is over, but not with the results GFO wants to see.
The prophecy that corn farmers would rue the day they turned their backs on their traditional feed customers, in favour of the fickle ethanol mistress, is becoming not only increasingly-relevant, but increasingly-true.
Stephen Thompson, Clinton, ON
(519) 482 - 3244
Ethanol from grain corn will end sooner than anyone expects and corn farmers will pay the price of turning there back on there traditional customers. I remember in 2006 the grains and oils seeds payment excluded "fed" grains and clawed back any feed purchases containing grains. Corn producers response at the time to the pork producers was "if there is any money left over after we get what we want " then you guys can have some-k g kimball
prophecy? corn farmers find some new markets and you act like they are doing something wrong? hello! a culmination of things happened last year, like a drought in russia and australia, poor yields in the midwest and china just has a voracious appetite period. its called supply and demand, right now the supply is lacking hence the demand. who cares what the usda or visilak says, they are wrong more than they are right. corn farmers will make some money and we all know that will change again, so no apologies here.
LD
Supply and demand? When the government has meddled in the market and caused a heavily subsidised industry (ethanol) to use 30% to 50% of the corn crop. That is not supply and demand, that is government picking favorites. Yes this will end sooner than many think and corn farmers should hope the traditional markets are still there. But then again the popular thinking is "we'll just run to the government and demand a handout".
ok so you've never recieved a handout? you wouldn't happen to be a pork or beef farmer would you? if you are in supply management you wouldn't need a handout. get out of the jello tree man. as long as we like meat there will be a corn market, quit hating.
LD
What ever happened to that mantra "we're all in it together"? I guess that's now officially out the window.
Unfortunately, your attitudes toward that 60% of the corn market which isn't ethanol, isn't normally associated with good business principles.
Good business people try to make sure their product is priced so that their customers make money - corn farmers, on the other hand, simply don't care if every hog and livestock farmer goes broke.
As it is now, if/when grain farmers lose the ethanol gravy train, there isn't a single-solitary hog or livestock farmer who'd get on the bus to go to Ottawa to attend a grain-farmer rally - that should worry grain farmers, but it doesn't seem to bother them in the least.
Stephen Thompson, Clinton ON
to clarify, I'm not going to apologize for making a profit, I can't control Chicago or the money funds, I never wished any body to go broke, I' don't write letters to the editor or comment on stories for a living. i farm in the real world. the market is the market for everybody, you have to adjust. who cares about protests.
ld
In that case, when your so-called "real world" takes a tumble after the "artificial world" of ethanol collapses, I don't expect to hear any complaining from any corn farmer.
Stephen Thompson, Clinton ON
With corn futures now down a dollar in under a week it would appear that Mr Thompson's prophecy that we are not going to have enough corn seems to have taken a little hit. Corn prices in Ontario last week took out highs last set 15 years ago in 1996, incidentally well before the ethanol expansion. When one accounts for the 40% or so general inflation over the last 15 years (even more for ag sector expenses) even last week's lofty peak was, in real terms, well below the '96 levels.
Mr Thompson seems to also forget that the livestock sector also receives rather extensive subsidies but doesn't face a tax on its finished product. Every litre of ethanol is hit with more than 40 cents of taxes and at 10 litres of ethanol produced per bushel that means every bushel of corn entering an ethanol plant will have $4 in taxes assigned to it.
Moreover the corn sweetener industry benefits greatly from protective tariffs on imported sugar that keep domestic sugar prices high enough to encourage much gretaer use of high fructose corn syrup.
There really is no user of corn in this province that doesn't benefit from some form of tariff or subsidy, so before too many stones get thrown perhaps we ought to be sure our own house is in order.
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