Will corn prices move higher?
Answers
3963 points
MNSL answered one year ago …
I think we are in the large stage of corn and other grain bull market.
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2775 points
Oldman answered one year ago …
YES! There used to be commdity surpluses in the "soft" (grains, cotton, vegetable oils, etc.), but these no longer exist: Biofuels (ethanol from corn and sugar; diesel from waste greases and veg.oils); increasing populations; a long period of optimal grain production climate (ca. 1900-1990), in the temperate zones; decreased arable land (floods, cities, housing,highways, burnouts and soil washes in tropical areas from logging) and a variety of other slow but cumulative factors, some of which have been excaerbated by humans, and some of which are long-term climatic shifts (desertification in N. Africa and subSahara; loss of glacial waters in the Andes for temperate zone farming, Australia's Queensland droughts, etc.).
In the U.S., corn production will be less than originally estimated because of cold & wet weather; plus it costs 40% more to plant (seed, fertilizer and diesel costs are up 100%+ from Spring 2007).
The production/demand for corn is almost as tight as the scenario for petroleum.
All of these collude to push corn production costs higher (fuel, fertilizer, chemical control agents), and edible yields down (late or flooded plantings, diversion of feed corn to high carb corn for ethanol).
2082 points
alanj answered one year ago …
Oldman's last paragraph sums it up. But, I disagree with the feed corn to ethanol program having a lot to do with actual higher corn prices. It is only perceived that way. It probably does have some effect, but not as much as some people are claiming. Here's what I mean. The feed corn that is being sent to the ethanol plants is having the starches/sugars removed. Which results in a higher protein corn. (which is healthier) It is then sent on as a feed corn. It is not thrown away. Which means there is very little loss (it's only had the starch removed). It has also been cooked, which makes it more digestable (another plus). In fact it could be a benefit, because the feed corn is now a healthier corn which is being used to feed such things as cattle (a part of our food chain), which is healthier for us.
It's being reported that all food prices are up. And ethanol is being blamed, because supposedly farmers are converting their acreage from another crop into feed corn crops. Let's look at some crops. Rice- Rice is grown in flooded fields. Can a rice field be converted to grown corn without a big expense? If it's too expensive they price themselves out of the market or take a loss. Sugar- I believe sugar cane is the main crop for producing sugar. Sugar cane is grown in low lying marsh type areas. It most likely will not support the weight of heavy farm machinery which is used to plant and harvest corn. So, you probably can't grow corn here. Coffee and cocoa- Aren't these crops grown in tropical rain forests in the area of the equator? I'm not so sure corn will grow there. One of the most likely reasons for higher food prices is higher fuel cost. First to run the farm equipment to grow the crops and then the transportation fuel costs to get them to you. I'm just asking to give you some "food" for thought. (Forgive the pun)
2775 points
Oldman answered one year ago …
This' a note to AlanJ, really...cocoa just went to historic highs; I live near the sugar cane "farms' near Lake Okeechobie in FL. They do use "heavy equipment," and even have their own railroad on the marshland, but probably can't compete with Brazil, so they're subsidized by the Feds. but your note on the reuse of the protein "waste" from corn-ethanol, doesn't solve the problem, even though U.S. Sugar burns the cane waste to power their mills and dry the juice, it doesn't transmit the power to the local utility as much as Waste Mangement does from their dump.
The high-protein residue from ethanolic fermentation is useful...if it doesn't need a lot of additional drying and transport. Tyson (chicken) reported that its feed costs have risen 40% yoy; Smithfield and other hog producers are slaughtering at > replacement rates and beef futures are higher for the Fall than spot prices now, because ranchers can't keep cattle in feed lots, and are increasing the slaughter rates.
158 points
marketdrop answered one year ago …
Yes it will go higher. Supply &Demand. Since the rain is &has flooded most of the fields in Iowa 3/4 of the whole state under disaster due to rain the supply will diminish.The end result will be higher corn prices ,,,,,lack of supply.
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127 points
dnce answered one year ago …
Corn is bound to go higher. Not only is Iowa having trouble getting crops into the ground, the WHOLE midwest has been having the same problem. Here in IL, just about the time the fields dry enough to get into them, another frog-choker rain comes along. As has been pointed out, the cost to produce and get the crop to market has increased dramatically . That doesn't always translate to higher prices for producers, though. But since estimates for this years crop are looking for a 40% decrease because of weather, that will drive prices up.
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