My View From The Country

2013 Bin-Busting Corn Crop Will Bring Some Relief

Cheaper corn will certainly help calf prices, but the greatest price support is still expected to come from the supply side.

The progress reports for the corn crop and the initial yield estimates make it increasingly likely that U.S. farmers will be harvesting the largest crop ever this fall. America’s farmers certainly delivered on the number of planted acres this spring, and the government crop reports make it appear that the only question left to be answered is whether Iowa or Illinois will win the yield contest. As the saying goes, it looks like a bin buster.

With that said, the basis in many areas continues to be unusually strong, demand for ethanol will only increase with cheaper corn, and corn is in pretty strong hands. Producers may not have the storage capacity for the record crop, but, financially speaking, a lot of farmers don’t necessarily have to sell their entire crop.

World supply and carryovers are still going to be fairly tight, especially considering the new era of corn use for energy. Certainly, Mother Nature and the American farmer have combined to give us what promises to be cheaper corn and feed compared to the last few years. However, the era of cheap corn is probably over at least until the dynamics of ethanol changes, or we string a few years like this year together.

Cheaper corn will certainly help calf prices, but the greatest price support is still expected to come from the supply side. The weather situation hasn’t only helped lower grain prices, but has improved grass and hay production as well. I say this with apologies to my friends who are still stuck in 3+ years of drought rivaling what was seen in the 1930s.

The bottom line is that better feed prospects may lay the foundation for the beginning of expansion. And that means fewer heifers going on feed, and even tighter supplies, down the road.

 

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Discuss this Blog Entry 4

on Dec 23, 2013

Corn demand is steadily increasing every year, as it is not only used for food but as a crop it is also used for energy. That is why a number of farmers are turning in to proper storage solutions for crop to make its shelf life longer than the usual.

on Jan 17, 2014

It is rational to see the corn industry working in a supply chain process with the cattle industry. This is just like the implication that cheaper corn prices would mean cheaper cattle prices on average. When the issue of the lack of storage capacity to accommodate to the over-pouring amount of corn, then the respective farmers should take advantage of the situation but careful planning is always essential. Should they fail to do so, they might just be doing things on impulse and result in huge losses instead. 

on Mar 12, 2014

Oh Man! “3+ years of drought rivalling what was seen in the 1930s." Tell me about it! It's already hot in the Gold Coast as it is, and now what with the flooding and intermittent drought here and there, the weather has seriously gone tits up hasn't it! All the more reason to make sure that there's a contingency plan in the storage of corn and making sure that there are enough reserves for all the industries tied to corn production.

on Oct 13, 2014

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What's My View From The Country?

As a fulltime rancher, opinion contributor Troy Marshall brings a unique perspective on how consumer and political trends affect livestock production.

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Troy Marshall

Troy Marshall is a multi-generational rancher who grew up in Wheatland, WY, and obtained an Equine Science/Animal Science degree from Colorado State University where he competed on both the livestock...

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