“The USDA projects larger corn crops than those of last year in China, Canada, Mexico, and the Ukraine,” Good said. “Production of all feed grains is expected to be larger in the EU, Canada, China, and Mexico. The largest increases in production, however, are expected in the Southern Hemisphere as production rebounds in Argentina and South Africa.  Those prospects will unfold in late 2012 and early 2013. The first USDA forecast for the 2012-13 marketing year is for record foreign feed grain production. The size of those crops will influence export demand for U.S. corn, with Chinese demand to be of special interest,” he said.

In addition to production prospects, Good said the corn market will be influenced by the world economic and financial conditions as they affect consumer incomes and commodity demand. 

“Domestically, the rate of implementation of 15 percent ethanol blends will also be important for corn demand as the blend wall for E10 approaches,” Good said. “Conditions are in place for a very large U.S. corn harvest, a return to a more abundant stocks situation, and a return to lower prices. The magnitude of these changes is still to be determined and will unfold over an extended period.  Even with higher average yields this year, substantially lower corn prices could have a disproportionately large impact on producer returns as anecdotal evidence suggests that a relatively small portion of the 2012 crop has been forward-priced at higher price levels,” he said.