The nation’s farmers probably planted more corn than the government projected earlier this month, analysts say, though that will do little to alter an outlook for tight supplies and high prices into 2012.
About 90.78 million acres were planted to corn this year, based on the average estimate in a Dow Jones Newswires survey of analysts before the U.S. Department of Agriculture’s annual Acreage report June 30.
The estimated acreage would be up less than 0.1 percent from a USDA forecast for 90.7 million planted acres in the agency’s monthly Supply and Demand report June 10. Compared to 2010 plantings, 88.2 million acres, estimated acreage would be up 2.9 percent.
A wet, cold spring plagued farmers across the Midwest this spring, delaying fieldwork far past the optimum time to plant corn. Drier conditions in late May and early June allowed some farmers to catch up, though others switched to soybeans or left ground unplanted because of flooding, analysts said.
The difficulties planting this spring’s crops have had grain and livestock markets on edge for weeks, contributing to Chicago corn futures’ record rally near $8 a bushel in early June. A big corn crop is crucial this year to replenish supplies that are heading toward the lowest level in 15 years, analysts say.
Acreage and supplies “remain huge concerns for corn,” Jerry Gidel, an analyst with North America Risk Management Services, Inc., said in a recent report.
The acreage report is scheduled to be released at 7:30 a.m. Central time. Soybean plantings were estimated at 76.48 million acres, down 0.2 percent from the USDA’s previous forecast, according to the Dow Jones survey.
Also June 30, the USDA is scheduled to release its quarterly update on U.S. grain stockpiles.
Because the USDA’s June acreage report is based on surveys of more than 88,000 farm operators during the first half of the month, the numbers typically provide a good handle on what kind of crop is coming once harvest commences in the fall.
But this year’s report may not only fall short of offering answers, it may raise even more questions because there were still many unplanted acres by mid-June.
“In a typical year, estimates of planted acreage would be reasonably accurate at this point, but this year uncertainty remains and comes from a number of factors,” said Scott Stiles, a University of Arkansas economist. “The acreage uncertainty will remain in commodity markets after June 30. It’s what gets harvested that will matter most.”
Based on expected plantings and the USDA’s previous yield estimate, 158.7 bushels an acre, the corn crop will total about 13.21 billion bushels. That would be up slightly from the USDA’s current forecast, 13.2 billion bushels.
While that would be a record harvest, livestock feeders probably will continue to face high corn prices, assuming ethanol demand remains strong and exports don’t slip significantly, analysts say.
Even if the USDA raises its corn acreage estimate, supplies of the grain “will very likely remain tight,” said Mike North, a senior risk manager with First Capitol Ag.
In trading June 28, corn futures for July delivery rose 22 ¼ cents to $6.83 a bushel, down nearly 15 percent from a record $7.99 ¾ on June 10. December corn futures, which reflect expectations for the fall harvest, rose 26 ¼ cents to $6.53.
Based on current futures prices, corn is expected to trade above $6 through at least July 2013. From 2003-07, corn futures averaged $2.65.
The bigger question the market has been wrestling with in recent weeks, North said, is “demand-centered.” North likened the current situation to 2008, when corn supplies also appeared likely to remain low. But that year’s financial crisis, combined with the worst U.S. economic slump since the Great Depression, led to a broad slowdown in commodity demand.
At the end of the 2008-09 marketing year, U.S. corn stockpiles totaled 1.67 billion bushels, 5 percent above the average for the previous 10 years.
“Like 2008, we could end up with well over a billion bushels of corn carryout if more cracks in the armor of the demand picture come to the surface,” North said.
However, if world economic concerns lessen, U.S. consumer confidence improves and grain exports bounce back after a recent dip, “then all of the demand discussion goes away and we continue on this tight supply story,” North said.
Tres Knippa, a CME livestock futures trader and owner of Lotus Brokerage, said cattle and hog feeders should take advantage of the recent price drop in corn to lock in cheaper supplies.
“You’ve got to have a perfect growing season and a perfect harvest just to maintain our supply outlook,” Knippa said. “Supplies are tight. It’s not going to change.”
Pork Magazine editor Marlys Miller contributed to this story.