The United States Department of Agriculture has issued its first projection of the 2008-09 U.S. corn crop and while acreage is expected to be down substantially from the previous year, the crop should be big enough to meet projected demand, says an industry official.
The government agency forecast 88 million acres of corn, down from 93.6 million acres last year. That is in line with trade projections of 88 to 90 million acres.
Rick Tolman, chief executive officer of the National Corn Growers Association, said the prediction comes as a relief to a commodity group experiencing unprecedented demand for its product.
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“We were pretty sure we weren’t going to get the 93 (million acres) that we got last year and we were even concerned it would be 87 or 86 or lower and so these stronger numbers give us a lot more reassurance,” he said.
If the crop comes in at projected acreage, there will be enough corn to meet the anticipated 330 million tonnes of feed, ethanol and export demand.
“If we get trend yields, yes, it will be enough,” said Tolman.
The USDA is projecting an average farm price of $4.25 US per bushel for the 2008-09 crop year, up slightly from last year’s average of $4.10 and well above the 2006-07 average of $3.10.
Corn prices set the tone for a number of crops Canadians farmers grow, so it is important to get a bead on where they are headed.
Tolman predicts a slight downward trend in corn prices unless farmers change their plans abnormal weather conditions reduce production.
“If we have normal weather and we have that (88 million) acres, we may have seen the high in corn prices right now,” he said.
But he suspects corn prices will be less volatile than wheat and soybean prices because it is far less export dependant. Corn is mostly domestically consumed, used for feed, fuel and other industrial purposes.
Strong growth in domestic corn demand is forecast for another three or four years.
Tolman said wheat and soybean prices are rising partially because they need to compete with corn for acres but mostly because of a worldwide shortage in the crops, a situation that could be addressed by increased production.
