Can & will we grow enough corn?
Looking at supply and demand projections for U.S. corn production this year, there are 2 big questions: Can farmers grow enough to meet all that demand? And, more importantly, will they?
According to his most recent calculations, University of Illinois ag economist Darrel Good says the current ethanol mandate will use least 4.65 billion bushels of corn this year. For food and "industrial purposes other than ethanol," 1.4 billion bushels will be needed. Around 2 billion bushels will need to be exported, and finally, Good says, 5.2 billion bushels will be needed for domestic feed.
"With adequate supplies, then, use of corn during the 2011-12 marketing year might be near 13.25 billion bushels," he says, adding them all up. "All of that potential consumption must be met from 2011 production since stocks at the end of the current year are expected to be at pipeline levels."
So, how many acres will farmers need to plant to corn this spring? With a potential yield range between 159 and 162 bushels/acre (the current yield range expected by most analysts), farmers will have to plant between 90.9 and 92.5 million acres, Good says, with a harvested acreage figure ranging between 83.8 and 85.4 million acres. "To allow for yield risk, we still believe planted acreage of corn needs to be near 93 million [acres] in 2011," Good says.
But, whether those acres get planted depends on a lot of factors right now, namely whether current demand levels will continue, how that demand will influence prices, then how those prices will affect corn consumption.
"With prices at 'reasonable' levels, it appears that corn consumption would likely be near 13.25 billion bushels during the 2011-12 marketing year," he says. "To bring some price relief to end-users of corn, but maintain prices at profitable levels for producers, soem build-up in year-ending stocks should be an objective next year. An inventory near one billion bushels would not provide a large buffer for production shortfalls beyond 2011, but would likely meet the dual price objective."
So, will farmers plant those necessary acres? The acreage is out there: Even if winter wheat and cotton acres increase, farmers could potentially plant almost 5 million more acres of corn this year, Good says. But, a lot will continue to hinge on price.
"Corn prices continued to move higher through last week. However, prices for the 2011 crop have not increased as much as the old crop," Good says. "March 2012 futures are $.90 below March 2011 futures prices. More strength in new crop corn prices may be required to get the needed acreage response."