Corn Market - All eyes focusing

Hoard's Dairyman: 

All eyes on the corn market

Thu, 10/07/2010

Tomorrow, USDA will release its Crop Production report which will shed some light on just how much corn might be harvested in this country this fall after all is said and done. It is an anxiously awaited release due out at 8:30 a.m. Eastern.

It has been a wide ride for the corn market in recent weeks. The drought in Russia had serious impact on wheat and other harvests there. The Russian government put an embargo on grain exports to protect the country's food and feed security.

That news caused corn futures here to shoot up, fueled to a great extent by speculators. Corn futures rose to more than $5 a bushel, and it looked like we were headed for some really expensive rations in the months ahead. Of course, it isn't only the price of corn that affects the costs of rations to those who purchase their grains. Essentially, all other "energy" feeds go up in price when the price of corn goes up. We were all facing this prospect just as milk futures were forecasting a Class III milk price of around $14 or belows in 2011.

Then came USDA's corn stocks report on September 30. Old crop corn stocks on September 1 totaled 1.71 billion bushels, up 2 percent from a year earlier. The following day, October 1, corn futures were down limit (30 cents per bushel). December corn closed at $4.66 that day, but had gained back about 18 cents a bushel as of yesterday. Some analysts suspect that some new-crop corn got included in USDA's stocks estimate, but USDA says no.

So, tomorrow's crop report will be significant. It will constitute an estimate of total corn production. There has been varying conjecture by different analysts about the actual number of acres that will be harvested, as well as the yield per acre.

Regardless, it looks like we will be facing higher corn and other energy-feed prices this winter. Earlier this week, those of us involved with the Hoard's Dairyman Farm pow-wowed with our consultants and talked about whether we should book corn before tomorrow's report and what feeds we can work into the ration this winter to reduce the amount of corn we need to buy.