Corn swings to limits on China-sized errors

Compound Feed

Prices rose to a record in $8.49 in August, forcing buyers to seek alternatives or shut operations. Hog producers have been able to cut corn use in some cases by 18% by substituting wheat, rice and other food byproducts, said Mark Tarter, the general manager of Effingham Equity Cooperative in Effingham, Illinois, which makes more than 200,000 tons of feed a year. It takes 670 pounds of compound feed, a mix of protein, starch and nutrients, to raise a hog to slaughter weight.

“Livestock feeders have most of their corn needs covered into the start of the harvest,” Tarter said. “We’ve been a net seller of corn during the last three months because of the increased substitution of other grains in livestock rations.”

The USDA’s March report had a margin of error for on-farm corn storage of 4.8%, 5% for soybeans and 5.4% for wheat. Three years earlier, it was 3% for corn, 4.6% for soybeans and 4.2% for wheat.

The government also releases its second survey-based forecast for corn planting tomorrow, after the wettest March-to- May period on record threatened to reduce acreage and yields from North Dakota to Missouri.

Fewer Acres

Corn probably was sown on 95.431 million acres, or 1.9% less than the record 97.282 million farmers intended in March, a Bloomberg survey showed. Some are leaving fields fallow, electing instead to make claims on federally subsidized crop insurance policies, said Bill Gary, the president of Commodity Information Systems in Oklahoma City, Oklahoma, a company providing analysis and information to traders.

About 65% of the crop was in good or excellent condition on June 23, from 64% the previous week and 56% a year ago, the USDA said. Yields may average 156 bushels an acre this year, the third-highest on record and boosting production to a record 13.62 billion bushels from 10.78 billion last year, Gary said.

“The transition from extremely tight supplies during the summer to a more adequate supply into September and October should keep futures in a nervous, erratic state,” he said. “Barring extreme weather in late July, December corn futures are expected to work lower toward the $4 area into harvest.”

www.bloomberg.com

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