What is in this article?:
- Corn price, demand forecast strong for 2011
- Could be a bidding war
- It can be said with some certainty, at least for the foreseeable future, that price and demand for corn will be good.
- If expectations are met, more than 13.4 billion bushelswill be either consumed or exported by the U.S. for the 2010/11 marketing year.
- In order toproduce a 13.4-billion bushel crop, U.S. acreage will need to increase at least by two million acresassuming a 160-bushel yield.
Could be a bidding war
“Soybeans and corn could get into a bidding war for acres as the global situation for soybeans supports prices and U.S. exports. The soybean market will not want to lose acres to corn in 2011, so any increase in corn acres will have to be bid away from soybeans or from another crop,” states the report.
Cotton is expected to grow in acreage so the South is not likely to lose cotton acres to corn, add the economists.
The income picture for the 2011 season is looking better than last year at this time, say the economists. Costs will rise on some inputs but output prices are much better. “Credit availability continues to be a concern as banks have tightened their lending limits and terms. Interest rates likely will rise as banks look to reduce the risk of loans and offset losses from other sectors.”
Variable costs are projected to increase in 2011 by 13 percent for dryland corn and 14 percent for irrigated corn. The decrease is due mainly to higher fertilizer prices, crop insurance and fuel prices. Seed costs are expected to remain the same for most varieties.
According to the report, Georgia growers planted 300,000 acres of corn in 2010 which was down 120,000 from 2009. Higher prices for cotton and peanuts encouraged growers to switch away from corn last year as prices for corn were below the previous year.
“Roughly two-thirds of the corn acreage planted in Georgia was irrigated last year. Irrigated yields and good early conditions led to a record corn yield for the third year in a row for Georgia at 140 bushels per acre.”
Total corn production for Georgia fell to 35 million bushels which is a 33-percent drop from last year. Growers abandoned a higher percentage of acres in 2010, giving a harvested acre estimate of 250,000 acres. The 2010 production represents about 15 percent of the total corn needed for livestock and ethanol production in Georgia.
The report further states that corn prices fell to $3.50 during planting, but recovered as harvest began in the South to reach $4.
“Concerns about U.S. yields sent the corn market upward in September, breaking $5 per bushel and then exceeding $5.50 in October. USDA is projecting the 2010/11 season average price for corn to range between $4.80 and $5.60 per bushel. The average season price for the 2009 crop was $3.55 per bushel for the U.S. and $3.60 per bushel for Georgia.”
Assuming a similar price relationship for next year would result in a $5.20 price mid-point for Georgia in 2010/11. “Prices are up due to domestic and global concerns about supply. The current pace of demand will lead to a very tight situation by the summer of 2011,” say the economists.