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Honored Advisor

We’re going to be in the sewer next fall,"


Is there any hope for corn prices next year? Market analysts Bob Utterback and Greg Wagner offer their thoughts on five wild cards to watch.

After the historic drought of 2012 destroyed much of the U.S. corn crop, many farmers turned the calendar to 2013 with hopes for a fresh start. The results this year were mixed. Some farmers experienced nearly ideal growing conditions and reported some of their best yields ever.

Others weren’t so lucky. An extremely wet planting season prompted a late-planted crop and roughly 7.7 million prevented planting acres. Many fields that did get planted were later plagued by hot, dry conditions. Iowa, the nation’s top corn-producing state, was one of the hardest hit areas.

However, USDA still predicted a record corn crop this year at 97.4 million planted acres, causing corn prices to tumble to the $4-$5 range, and they have struggled to rally ever since.

So what should farmers expect from 2014? Bob Utterback, president of Utterback Marketing and Farm Journal economist, and Greg Wagner, president of GWX-Ag Advisors and AgWeb markets analyst, offer their thoughts on five hot topics for next year’s market.

1. Acreage

In its September World Agricultural Supply and Demand Estimates, USDA predicted that 89.1 million acres of corn would be harvested this year, down 8.3 million from its June planted acreage estimate. With corn prices struggling, will farmers stick with corn next year?

"I think on the surface, the answer is always that there will be some adjustment. The question is which direction?" Utterback says.

Current talk in the trade is that more than 4 million corn acres will be lost, but Utterback is skeptical of that number. He predicts that initially, about 3 million to 4 million acres will be lost, but those will occur in lower-production regions.

Wagner agrees.

"There’s no question that there are widespread expectations that there will be a reduction in corn acreage and an increase in soybean acreage," Wagner says, "and it is my humble opinion that the corn acreage reduction will not be nearly as dramatic as some are forecasting."

His estimate is even more conservative: He predicts a reduction of just 1 million to 1.5 million acres.

 

2. Weather

From an extremely wet year in 2011 to extremely dry in 2012, to a year with both conditions in 2013, farmers are getting used to crazy weather. So how will weather affect the 2014 market?

"Only God knows," Wagner says. "There’s nothing to suggest at this juncture that there is any macro-weather force (such as El Nino or La Nina) that will adversely impact the U.S. crop next year."

However, Utterback says that the lack of a major weather event could be a major problem for corn prices.

"If Mother Nature rewards us with a good-yielding year, we’re going to be in the sewer next fall," Utterback says.

With corn prices as low as they are currently, many farmers are opting to store their crop, which could lead up to an oversupply if next year’s yields are strong.

"If we don’t have a bear market in 2014, it’s because of weather," Utterback says. "The only way we’re going to have $5-$6 corn, is if we have a 2012-type drought event."

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19 Replies
Senior Advisor

Re: We’re going to be in the sewer next fall,"

These guys don't even know the difference between planted and harvested acres. Look at the paragraph about acreage. They think the June number posted is what will be harvested

Clueless to the historic 91 to 92 percent of planted number that accounts for silage, seed production, etc

They will really crap when they see 85-86M harvested instead of 89M
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Senior Advisor

Re: We’re going to be in the sewer next fall,"

And now you know why I want to take a bat to most of these ambulance chasing self proclaimed a holes.

And why we need to get rid of these reports. Forever
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Senior Contributor

Re: We’re going to be in the sewer next fall,"

I'm being proactive.

Farming in Ontario with the lowest corn prices in North America I have a deal with the neighbour dairy farm to plant alfalfa for them on a good part of my 2014 'corn' area.

 

Was talking to another farmer today and he was telling me he was planting more soys next year instead of corn (me too).

 

Last fall I delivered corn on contract for $300/t price today $148/t not much incentive there and 2014 contract price $149/t.

 

There, now that will help out your price.

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Contributor

Re: We’re going to be in the sewer next fall,"

Why is everyone so surprised with $4.25 corn?I'm in the same camp as them...won't see much reduction in corn acreage in 2014.
For some reason everyone thinks demand got us to $6-7 dollar corn and not 2011 147 yield and 2012 124 yield on top of worldwide droughts. We have a 14B ++ bushel crop. I do think some corn on corn will get shifted but the corn bean ratio for 2014 won't pay the bills at this point.
2015 will be worse then 2014.
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Honored Advisor

Re: We’re going to be in the sewer next fall,"

If the corn price continues to go lower,  there are gonna be folks who are going to wonder where all the corn acres went.  Maybe not at $4 corn, but if corn drops to $3 and under,  be prepared for an acreage drop like many have never seen.  Some of these experts really have no clue.  If Utterback's prediction of corn prices going into the sewer come true, another reduction in acres will take place.

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Highlighted
Veteran Contributor

Re: We’re going to be in the sewer next fall,"

What you gonna plant instead roaringtiger. Peak soybeans
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Senior Advisor

Re: We’re going to be in the sewer next fall,"

Lots of other crops could be grown as a rotational crop to corn.  If corn is sub $3, they might even offer close to the same profit margin.

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Senior Advisor

Re: We’re going to be in the sewer next fall,"

Here's one free hint to all those out there that do not understand fringe acres

They can and will go to soya and wheat and milo

And just so we are clear. When we are taking about the acres totals we have today. The fringe out numbers the core. This why for decades the fringe burned up to drowned out and the core did ok and prices dropped. Not so anymore

Have been working on COP number the last week for 2014.

If corn isn't near or over 5 come spring we will go all soya. And we are not the minority but the majority for fringe. Have not talked to anyone yet that isn't considering all soya especially on sub 140 corn ground

This isn't the same deal as 30 years ago

And you boyz in 200 plus corn country need to realize that 120 bushel corn at 4 dollars doesn't pencil but 40 bushel soya at 12 does.

Both are 480 gross but I can put a soya crop in for under 100/acre. Sharpest my pencil is for corn so far is around 200.

100/acre swing with a better shot at 40 soya than 120 corn if this weather doesn't straighten up
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Advisor

RMA Claims

just returned from Decatur IL for a family situation.   One of the people there was a crop adjuster for ADM.  She said they had been inundated with claims on CORN for both Greensnap and for Claims on not meeting bushels on fall price.   I'm hearing the same thing here.

 

Until the pipeline runs dry through lack of product because farmer holding grain, we'll never know the truth about yields, harvested acres, or carryout.....and we'll be taking $ 3.00 for corn and lining up to shell out the big bucks for inputs like a bunch of idiots.   Before I'll knowingly produce a crop to LOSE MONEY - I'll be parking the equipment - or planting 100% beans with some oilseed sunflowers thrown in the mix.

 

Don't count out Mother Nature aka GOD for bringing the fantasy of never ending corn and beans to reality.   Just saying.

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