Ever wonder what it looks like from the other side of the market when corn and soybean prices start going through the roof, so to speak?
Last Friday (Oct. 8), USDA reduced its forecast for the 2010 U.S. corn crop by 4 percent to 12.7 billion bushels. As a result, USDA lowered its estimate of 2010-2011 ending stocks to less than 1 billion bushels.
Chicago corn and soybean futures reacted strongly with December corn closing at 5.79 cents per bushel and November soybeans at $11.78 per bushel today. (Other commodities also continued to rise with December cotton hitting $1.10 per pound.)
The euphoria over corn prices climbing nearly $2 per bushel from where they were trading a couple of months ago is not being shared by livestock producers for the most part, according to Dr. Steve Meyer, an analyst with Paragon Economics in Des Moines, Iowa.
“Last Friday’s USDA Crop Production and World Supply and Demand Estimate reports have made this week’s column much darker and foreboding,” said Meyer, who writes a column for National Hog Farmer’s Weekly Preview. (National Hog Farmer is a sister publication to Delta Farm Press.)
“Just eight short days after finding 300 million bushels more corn in Sept. 1 inventories, USDA reduced its forecast of 2010 corn yield and total crop size enough to push projected year-end stocks to less than 1 billion bushels. That level puts the projected year-end-stocks-to-use ratio at its lowest level since 1995-96 and the second lowest level in my data set, which goes back to 1969.
For more of Meyer’s article and other news, go to http://nationalhogfarmer.com/weekly-preview/1011-corn-stocks-feed-prices/.
Steve Meyer can be reached at [email protected].