Corn prices appear to be on the upswing for both the short- and long-term forecast, according to two university economists.
“This is the slowest corn harvest on record, and the added threat from harvest losses, plus the high moisture content and drying costs have all contributed to boosting prices,” says Chad Hart, Iowa State University agricultural economist. “The season-average price is already up 40-50¢/bu. compared to mid-October.”
In addition to the potential for more weather scares, the global demand for corn continues to provide a price boost to corn, says Hart. “The export numbers on the corn side show that it’s holding comparable to or a little better than what we had last year,” he says. “Our smaller markets have jumped in early, and in a major way. Plus, Mexico’s recent willingness to accept GM [genetically modified] corn has helped us to continue to grow that export market.”
As a result, USDA’s projections show corn exports being a little higher this year than last year, which should help to maintain or increase prices, Hart says. Still, unlike soybeans, corn has not yet shown an inverted market that would signal an even more bullish outlook, he adds.
“Corn still continues to show pretty good price strength, however,” says Hart. “The corn market is well into making it pay to hold it for awhile.”
Buyers remain poised to reward on-farm storage for corn in most situations this marketing year, agrees Darrel Good, University of Illinois Extension economist. “We have a very strong demand for corn ethanol right now, so consumption may well exceed expectation,” says Good. “That should be enough to move corn prices higher as we move into the coming year. I’m not wildly bullish about corn, but firm to a little higher would be my expectation for the next few months.”
Also, Good concurs that Mexico’s recent decision to allow GM corn imports from the U.S. is helpful to the market. “It just makes the U.S. market size bigger, which is friendly to prices for the long term,” he says.
Crop decisions in South America could also help to boost corn prices for the next marketing year, adds Good. “Right now, it appears that both Brazil and Argentina will plant more soybeans and less corn than they have previously,” he says. “That leaves an opportunity for the U.S. to supply more corn on the global market and could help to boost corn prices for next season.”
As far as next season goes, concerns that an El Niño weather pattern will bring droughty conditions are less than likely, says Drew Lerner, owner, World Weather Inc. “Technically, we are in an El Niño weather pattern right now, and we have been since late summer,” says Lerner. “However, it’s just a weak one. Unless things change soon in a drastic way, we won’t be seeing a traditional El Niño this winter or spring.”
A traditional El Niño would put much of the Corn Belt into a drier-than-normal weather pattern for winter, which sometimes extends into early spring, explains Lerner. “In the current situation, we just have too much moisture in the ground to bring us into spring with a true dryness issue,” he says. “El Niño is supposed to weaken in the spring, and that might generate some greater potential for drier weather, but if El Niño prevails, the weather will turn wet again in late spring. My expectation is that the ground will be plenty moist again next March and April to supply corn seedlings the moisture they’ll need after planting.”