March planting intentions and weather are keys to price prospects for corn

Bar chart showing U.S. corn prices.

Given the low stocks-to-use ratio projected for corn, increasing market prices are likely to ration demand for the balance of the year. It is assumed by many that the stocks-to-use ratio cannot fall below the current projection of 5 percent. This level translates into about an 18-day supply of old-crop corn at the beginning of the 2011/12 marketing year; however, some new-crop corn is usually harvested and available for use before the September 1 start of the new marketing year. If the March planting intentions show a sizeable increase in corn plantings and weather is generally favorable this spring, corn prices may moderate. However, if the planting intentions do not show a significant increase in acreage, corn development gets off to a slow start, or weather is less than ideal, corn prices will continue their upward spiral. This figure is from Feed Outlook, FDS-11b, Economic Research Service, February 11, 2011.

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