WASHINGTON – American farmers will pocket the highest farm-gate price for corn in six years, an average $2.45 a bushel, thanks to high-volume exports and strong demand at home for livestock feed and ethanol, the government said Tuesday.
As a result, the U.S. Agriculture Department (search) said, the corn stockpile should shrink to 901 million bushels , the smallest supply since 1997, before the new crop is harvested this autumn.
"I think the fireworks are just beginning," said analyst Emily French of the consulting firm World Perspectives (search). She said feed (coarse) grain stockpiles worldwide were becoming "precariously tight."
Stockpiles would drop by nearly one-third, or 45 million tonnes, this trade year, the USDA estimated. Corn accounts for the lion's share of feed grain production around the world.
Rising prices may prompt U.S. farmers to plant more corn this year despite the highest soybean prices since the mid-1990s when grain and oilseed values soared in the face of short supplies.
Some analysts say corn sowings may climb by 2 million acres from last year's 78.7 million acres . The USDA has projected 79.5 million acres (32.2 million hectares) and will update the figure at its annual agriculture outlook forum on Feb. 19 and 20.
"You should see increased corn acres," said French. "Nitrogen (fertilizer) prices are definitely going to be a limiting factor." She also pointed to dry conditions in the western U.S. Corn Belt and Plains.
In a monthly look at crop output and demand around the globe, USDA raised its forecast for U.S. corn and wheat exports by 25 million bushels each for this marketing year, to 1.15 billion bushels for wheat and 2 billion bushels for corn.
Competition from South America's soybean crop -- which includes a record 61 million tonnes from Brazil and is now ready for harvest -- "will limit U.S. soybean exports during the second half of the marketing year," USDA said. It kept its forecast of U.S. soybean exports at 900 million bushels .
USDA forecast a 25-million-bushel increase in use of corn for livestock feed, and said ethanol plants would use an additional 30 million bushels. At 901 million bushels, the corn carry-over supply would be the smallest since the 883.2 million bushels on hand at the end of the 1996/97 marketing year.
With larger exports, the wheat stockpile would fall to 534 million bushels, USDA forecast.
Private consultant John Schnittker said dry weather in the wheat-growing Plains states loomed as a more important factor than minor changes in export sales. Without nourishing spring rains, some wheat fields will not sprout and will have to be abandoned, he said.
"The big deal now is the new crop of wheat," Schnittker said. "The lack of either surface or subsoil moisture will be very important."
Growers sowed 43.464 million acres to winter wheat for harvest this year, USDA estimated last month, down from 44.945 the preceding season, due to dry weather.
Soybean futures prices plummeted at the trend-setting Chicago Board of Trade with the discovery of a second case of Avian influenza in Delaware. Soybeans for delivery in March closed at $8.34-3/4 a bushel, down 12-3/4 cents.
March corn ended the day at $2.80 a bushel, down 4-1/4 cents, due in part to lower soybean prices. March wheat settled at $3.84-1/2 a bushel, up 2-1/4 cents.
Earlier in the day, USDA projected larger U.S. poultry exports to offset meat production lost to a different strain of Avian influenza in Asia.
It forecast poultry exports of 5.275 million pounds , compared with the 5.1 million pounds estimated one month ago.