More acres and higher yields are expected to lead to a record corn crop this year, USDA analysts say, as higher expected returns are encouraging more producers to opt for corn over soybeans.
“We're forecasting about a 1.5 million acre increase in corn, with a similar drop for soybeans,” USDA Chief Economist Keith Collins said at the annual Agricultural Outlook Conference at Washington, D.C. “This will happen as a result of relative prices and loan rates that favor corn, plus several years of disappointing soybean yields.”
Peter Riley, agricultural economist for USDA's Farm Services Agency, says preliminary projections point to plantings of 80.5 million acres this year, with an average 139.7- bushel yield, up from 130 last year, and well above the record of 138.6 bushels in 1994. Continued drought in the Midwest states, however, could have a downward impact on the acreage/yield forecast.
The outlook for higher stocks at the end of the 2003/04 marketing year will likely push corn prices 20 cents lower than 2002, to about $2.15 per bushel.
The “big daddy” of growth in the corn sector, Riley says, will continue to be use for ethanol production. “Last year was a remarkable one for ethanol, and 2003 should be another big year. Corn use for ethanol has more than doubled since 1996.” A major factor in more ethanol use will be California's mandated switch from methyl tertiary butyl ether gasoline mixtures to ethanol, now slated for January 2004.
However, several California refineries have already modified their facilities for ethanol use and others are expected to do so this year. Several other states have banned, or are trying to ban, MBTE, which is expected to add to the sharp boost in ethanol demand. As a result, ethanol producers are expanding existing facilities and building new plants as rapidly as possible.
Exports of corn could rise as much as 100 million bushels this year, he says.