CHAMPAIGN, Ill. — Increased U.S. and global production will
push corn prices lower in the coming year.
U.S. corn production is forecast at nearly 13.989 billion
bushels, up 30 percent from 2012, according to the U.S. Department of
Foreign corn production has increased 46 percent since the
2005-2006 marketing year. Foreign corn exports are projected at 2.946 billion
bushels in the current marketing year, compared to 1.052 billion in
“The rest of the world has expanded their exports of corn in
competition with the U.S. The significance of this is that global step-up in
production that has occurred will not reverse itself as was our experience in
the 1970s,” said Darrel Good, University of Illinois Department of Agricultural
and Consumer Economics professor emeritus.
Good was among the university’s presenters at the Illinois
Farm Economics Summit.
Corn exports this year are projected at 1.45 billion
bushels. U.S. corn exports have declined since the high mark of about 2.4
billion bushels in 2007-2008.
Exports were 700 million bushels last year, the smallest
export market in the past 42 years.
“We are getting back some market share, but we’re not seeing
a recovery back to that 2 billion bushel market that we had seen. It’s kind of
good news/bad news,” Good said. “We’re bouncing back from a very poor year, but
there will be some limit to the size of that because of the competition we
China was a corn exporter until 2007-2008, and USDA projects
that country will import 2.67 million bushels in the current marketing year,
most of which will be from the U.S. Some expect Chinese imports to be much
larger as current low prices are used to rebuild domestic reserves.
“The other thing that’s happened in the corn market that is
of significance is this rapid buildup of corn used for ethanol. It began in
2005-2006 and was one of the factors that contributed to the run-up in corn
prices during that period,” Good said.
Corn usage for ethanol peaked at 5.019 million bushels in
2010-2011. The USDA estimates 4.95 million bushels to be used for ethanol
production this marketing year.
“With the Environmental Protection Agency’s proposed
revision to the Renewable Fuel Standard, it appears we may be looking at a flat
pattern of corn used for ethanol going forward,” Good said. “The good news/bad
news is the rapid period of growth is behind us, but we still have a sizeable
market for ethanol for an extended period of time.”
Corn for feed and residual use has declined since 2005-2006
due to the increase in ethanol production and, in turn, the rise in using
distillers’ grain for feed.
However, USDA projects an increase this year in feed and
residual use to 5.2 million bushels, compared to 4.333 million bushels last
Good said corn also has more competition from wheat for feed
and residual use, and there has been a sizeable increase in June through August
the past two years.
The final corn production numbers for this past growing
season will be released by USDA in January. Production currently is estimated at
nearly 13.99 billion bushels. Last year’s drought-limited production was 10.78
Ending stocks increased from 824 million bushels last year
to a projected 1.792 billion bushels this year. Harvested acres were estimated
87.2 million, and the average yield was 160.4 bushels per acre.
Good said even if there is a small decline in U.S. acreage
next year, a trend yield near 165 bushels would result in a U.S. crop near 14.5
billion bushels in 2014 and a further buildup of corn stocks next year.
“It is difficult to imagine that total crop acreage will
decline in 2014 given the 8.3 million acres of prevented plantings in 2013 and
the 1.6 million (net) acres released from the Conservation Reserve Program this
year,” he said.
“I expect some reduction in corn acres. I do expect some to
cutback in second-year or continuous corn. The budget suggests that soybeans
might be competitive with corn, but at this point I look for a very minor
“I’m of the opinion that we’ll see acreage continue to be at
a high level, and that’s a little bit bearish on the corn markets moving
“Obviously, there’s a lot riding on next year’s yield. We
don’t know much about that, but the expectation at this point has to be for a
very large corn crop next year and some continued pressure on prices.”
Good projects corn prices for 2013-2014 in the low to mid-$4
per bushel range and possibly 50 cents lower for next year’s crop.
“My concern is both of those projections may be too
optimistic. I’m a little bit concerned that while we’re not going to average
$4.50 projected for this year — we’re below that at this point — and if we have
as large of a crop as I think we could have next year, it may be difficult to
maintain corn prices at even $4 next year,” he said.
The average corn prices ranged from $5 to $7 the past three