U.S. farmers will hold corn rather than sell at prices that have dropped 30 per cent this year on expectations of a bumper harvest, predicts a U.S. Grains Council official.
“In the glut of the harvest, we will likely trade lower than we are now, but because of farmers’ strong financial position, they will store the corn as opposed to sell early on,” council secretary-treasurer Ron Gray said on the sidelines of a conference in Australia.
U.S. producers have enjoyed huge profits over the last few years as corn prices climbed to record highs due to tight global supplies. But since peaking at $8.43-3/4 a bushel in August last year, corn futures have plunged to the $4.75-a-bushel range and will likely stay low unless an early frost hurts production, Gray said.
The weather has been ideal in most states this year. Nebraska’s average corn yield is at 154.9 bushels per acre and Indiana’s at 167.36 bushels.
However, Gray said declining prices could curb growth in lower-cost producers such as Argentina, Brazil, and Ukraine.
“There may be places where acres will shrink in the very marginal areas where (the cost of) transportation is exceedingly high,” said Gray.