There are three factors to watch in the corn market over the next five months, said grain analyst Richard Brock — planted acreage, corn yield potential and feed and residual use.

Brock, addressing producers at the Mid-South Farm and Gin Show in February, believes that the latter should be decreasing in the next few months because USDA is projecting more corn being crushed for ethanol, therefore allowing for more substitution of DDGs, which would reduce the feed and residual number. Feed and residual use for 2010-11 is currently estimated at 5.2 billion bushels, but Brock said it could be as low as 4.9 billion bushels. “That would be a reduction of 300 million bushels added to the carryover.”

Brock estimates that corn ending stocks will increase from 675 million bushels in 2010-11 to 979 million bushels in 2011-12. “That’s still reasonably tight, but if you add 300 million bushels from feed and residual, that takes you to 1.279 billion bushels.”

Brock believes corn acreage will fall between 91 million and 92 million acres this season. He pegs corn yield at 166 bushels, a number which might be too low, especially if favorable growing conditions allow corn genetics to reach their full potential.

Brock believes that rapidly improving genetics have kept corn yields respectable through several years of unfavorable weather. But if there’s ever a year when everything goes right, yields could respond in a big way.

The Midwest is setting up nicely for such a year, he says. “I have never seen better soil moisture and conditions in prior to spring planting. In 2009, we had the worst fall we ever had. It was wet and it was long. Farmers were still harvesting corn in January. There were cartoons going around of a combine running through the field with the corn planter right behind it.”

That was followed in 2010 by the earliest harvest in history. That led to timely ground preparation for this season’s crop. “We had the heaviest fall fertilizer application we’ve ever seen. Now the big question is how big is the opening for planting going to be this spring.”

If it all comes together, yield pushing 172 bushels per acre “is not out of the realm of possibility,” Brock said. “Obviously, you can’t count on that until you get the crop planted, but if you get this crop planted and get to the middle of June without any major crop problems or heat issues, we could really ramp these yields up.

“If U.S. growers plant 92 million acres of corn and produce a yield of 172 bushels per acre, carryover jumps to 1.6 billion, and you’re looking at a corn crop that’s $2 a bushel overpriced.

“The bulls will argue that we have a tight stocks-to-use ratio and if we have any delays getting planted or weather problems in May and June, we could blow the top off the market. But I think that’s a tough bet. I can build a fundamental argument for bearish scenarios in corn, cotton and soybeans. All it takes is one good crop. But we have to get them planted.”