The USDA reported a cutback in corn plantings as farmers switched to soya beans after March record high pricesThe 2008/09 corn crop is projected at 12.1billion bushels, down 7 % from the record 2007/08 crop. . They also anticipate (World Agricultural Supply and Demand Estimates) that next year's corn stocks will drop 45% to to 763 million bushels, the lowest since 1996.
Corn futures closed at a record high on Thursday at $6.3025 a bushel, and fell back to close 1 cent down at $6.2925 a bushel , having gained nearly 40% this year.
Ethanol plant usage of corn in the US is projected at 4 billion bushels next year, up more than 30% from this year and accounting for nearly 40% of domestic corn consumption. Rising ethanol demand is expected to push corn prices higher in the future, especially as crude oil has just closed at record highs of $126 per barrel on Friday. However ...however ... One bushel of corn produces 2.8 gallons (ish) of ethanol. With corn at $6.30 and ethanol selling at $2.60 - all those ethanol plants that Mitch Daniels helped throw up in Indiana start looking very reliant on selling the 1/3rd resultant grain for feed corn for any profit. (feed grain sells at approx price of corn currently)
On top of this USDA said only 40% of the corn crop is planted, compared with an expected 80% planted by now. Wet, cool weather is delaying the planting so much that even if corn gets planted in the next week or two. Yields will fall for two reasons :
1. Low soil temperatures slowing growth
2. Pollination will be delayed until the weather is too hot in the Mid west corn belt states.
For soyabeans, stocks are likely to increase 28% to 185 million bushels. The corn and soybean crop season both end on Aug. 31.
US growers have reversed last years crop planting . Corn prices hit record highs last spring, while soybeans prices were trading at relatively low levels. This encouraged farmers to grow fewer soybeans last spring.
This spring, with soybeans prices soaring due to lower production, corn prices moved lower. Picking up on the price signal, farmers cut corn plantings and increased their soybean acreages which is expected to surge nearly 20%, boosting next year's production by 520 million bushels to a total of 3.1 billion.
In Friday's futures trading, soybeans for July delivery soared 28.5 cents, or 2.2%, to $13.385 a bushel.
The impact of higher corn prices affects diverse retail markets ;
1. Popcorn prices to rise
2. Corn syrup cost will rise which affect almost every retail food brand from ice cream to soft drinks and confectionary.
3. Red meat sales are already down as higher oprices of feed corns drive dem and down.
4. Ethanol sales hit and compwetition from sugar cane sourced product affects prices.
New Zealand farmers face huge rise in fertiliser costs
Fertiliser supplier Ballance Agri-Nutrients head of business development Peter Mourits said farmers could expect the price of superphosphate to rise from about $270 a tonne to more than $400 this year. A year ago superphosphate cost about $190 a tonne, although local price rises had not reflected the global increase.
Statistics New Zealand said the amount of superphosphate used in New Zealand increased from 541,557 tonnes in 1986 to 1.26 million tonnes in 2006.
Sulphur and phosphate rock - the two main ingredients of super phosphate - had risen from about US$45 ($58) and US$50 a tonne respectively at the start of last year to spot market prices of US$600 and US$300 a tonne or more, Mourits said.