Daryll Ray and Harwood Schaeffer of the University of Tennessee, Institute of Agriculture, just released an important article on the increases in demand and production cost for corn despite a projected price decline of about 35%. Please read the full article here.
“With higher year-ending stocks for the 2013 crop, the USDA projects a mid-range season average price for corn of $4.50 per bushel, well below the $6.89 season average price for the 2012 crop. This represents a projected price decline of 34.7 percent, the largest single-year price decline in more than 60 years….
A comparison between 2013 and 2009 shows that in 2013 production is projected to be 900 million bushels higher than 2009, domestic consumption is projected to be 463 million bushels higher, and exports are projected to be 579 million bushels lower. Total use in 2013 is projected to be 116 million bushels lower than it was in 2009, suggesting that if spring 2014 planting goes well, prices could go lower yet….
This time around, there is no price safety net to make a new higher price plateau stick. Furthermore, if prices fall well below the total cost of production and stay there for several years, revenue insurance will be of little value as an income safety net for crop farmers as well.”