How will your farm budget handle $4.80 corn and $10.50 beans?
Exports will be at record levels, dominated by soybean purchases by China. However, corn will not be high on the global shopping list and will be at the lowest levels since the early 1970’s. The result will be Brazil taking over as the global corn exporter during the marketing year for the 2012 crop, then the US returning to the top spot for exports of the 2013 crop.
On the flip side of lower grain prices are increased opportunities for profitability in livestock production. High feed prices have been their nemesis the past two years, and that scenario will continue until the 2013 harvest. While poor grazing resources have troubled cattle producers, they are joined by other livestock producers who have been challenged by high grain costs, and that limited expansion. Glauber says lower prices will foster expansion. But he says a repeat of 2012 will likely result in further liquidation.
USDA expects large corn and soybean acreage in 2013 and with normal weather there will be large production and a re-building of carryover stocks. High corn prices have diminished its demand, but high prices are still being paid by China for soybean purchases and they will be among the US export leaders. High corn prices have also diminished ethanol demand, along with fewer miles driven. The result of increased production will be drops in corn and soybean prices in the neighborhood of 30 percent.
Source: FarmGate blog