Corn avalanche coming as rain trumps planting drop
By Jeff Wilson
CHICAGO — The 8-foot corn stalks on Bill Long’s farm in southern Illinois are so big, green and healthy that he wishes he’d sold more of it sooner.
Like many growers across the Midwest, Long expects a second straight record crop that will boost domestic stockpiles already at a four-year high. Output in the U.S. will jump 2.8 percent to 14.314 billion bushels, the most ever, researcher the Linn Group estimated in a July 1 report. Even after fewer acres were planted, the wettest June on record left fields in the best condition since 2003 and sent prices into a bear market two months before the harvest starts.
“There is a wall of grain coming at us,” said Roy Huckabay, an executive vice president at Linn Group in Chicago, said in a telephone interview Wednesday.
Two years removed from a devastating drought that damaged crops and sent prices surging, farmers will see yields rise 4.1 percent to an all-time high of 165.3 bushels an acre, government data show. Rising grain output in the U.S., the world’s largest producer, is keeping global food prices in check while boosting profi t for meat producers including Tyson Foods and makers of sweeteners and ethanol including Archer-Daniels-Midland.
Futures have tumbled 20 percent since the end of April, slipping into a bear market on July 3 to $4.1525 on the Chicago Board of Trade, after touching $4.145, the lowest since Jan. 10. The Bloomberg Commodity Index of 22 raw materials dropped 2.6 percent over the same period, while the MSCI World Index of equities advanced 4.7 percent. The Bloomberg Treasury index gained 0.3 percent.
Corn’s slump may worsen once the harvest starts. In separate reports, Goldman Sachs Group said June 23 that prices will drop to $4 in six months, while Rabobank International said July 1 the grain will average $4.07 in the fourth quarter. Dan Basse, the president of AgResources in Chicago, predicted a drop as low as $3.50.
As of June 29, 75 percent of the crop was in good or excellent condition, compared with 67 percent a year earlier and the highest at this stage of development since 2003, the U.S. Department of Agriculture said. After low temperatures delayed planting this year, the arrival of warm, wet weather accelerated plant development in June with about 5 percent already reproducing this week, up from 3 percent in 2013.
“Right now, it looks as good as it did last year when we had a record harvest,” Long said by telephone from Franklin, Ill., where he farms about 3,000 acres with his son. “We have moisture in the ground and mild temperatures for successful pollination. We are ahead of the game.”
In Iowa, the top U.S. grower, fields show “phenomenal yield potential,” said Todd Claussen, director of agronomy at Amesbased Farmers Cooperative, the largest member-owned grain elevator and farm-supply company in the state. Claussen, who travels 55,000 miles a year scouting fields, said farmers planted more seeds per acre than ever and predicted yields in Iowa may near the record of 182 bushels an acre in 2009.
Improved output per acre is more than making up for a 4.4 percent drop in harvested acreage forecast by the USDA.