U.S. corn producers need to plant about 89 million acres this spring to avoid exacerbating an already tight supply situation, according to Alan Conrad, with the Zaner Group, speaking at the Minneapolis Grain Exchange press briefing on the April 9 World Agricultural Supply and Demand Estimates.
“The trade really needs more than 86 million acres (projected by USDA's March 31 Prospective Plantings Report) this year. The usage numbers and a trend line yield of 154 bushels could leave us with a carryout of 650 million bushels next year, which does not allow for any problems or errors this coming summer.
“It tells me we need more corn and the volatility in the corn market will continue. I think we need a minimum of 3 million more acres of corn.”
Conrad, who works with farmers and grain companies to hedge their commodities, noted that old crop corn carryover of 1.28 billion bushels was about 65 million lighter than the average trade guess and 155 million lower than last month's USDA estimate.
Wet weather and the potential for delayed planting also continue to spark the corn market with early April prices rising to within a few cents of all-time highs.
If corn prices continue to rally to buy acres, additional acres could come from cotton in the South and soybeans in the Midwest.
While soybean ending stocks are also tight, at 160 million bushels, “I think we can afford to lose a few bean acres partly because we have two huge crops a year via South America and the United States. But we really can't get corn down tighter than this.”
Conrad is not surprised that estimated corn feed use is rising while ethanol use declined. “Ethanol producers have to be feeling the squeeze because the ethanol price is not keeping up as well as they would like. As for livestock, as long as the livestock are there, they're going to be fed.”
Conrad noted that hog producers who haven't done any pre-pricing of feed inputs “are really hurting big time,” with high corn prices.
Conrad says Midwest corn producers “are starting to lean toward a little more corn. Corn is going to be supported until we know that we are going to have a decent-sized crop this year.”
Conrad says a weak dollar continues to help corn exports. “The real challenge with exports is if the U.S. dollar starts to rally. A stronger dollar could hurt the hog producers though.
“Something like 20 percent of the pork is exported. If we don't move that out, it could really wreak havoc.”