The 8-foot (2.4-meter) corn (CBOT:ZCN14) stalks on Bill Long’s farm in southern Illinois are so big, green and healthy that he wishes he’d sold more of it sooner.
Like many growers across the Midwest, Long expects a second straight record crop that will boost domestic stockpiles already at a four-year high. Output in the U.S. will jump 2.8% to 14.314 billion bushels, the most ever, researcher The Linn Group Inc. estimated in a July 1 report. Even after fewer acres were planted, the wettest June on record left fields in the best condition since 2003 and sent prices into a bear market two months before the harvest starts.
“There is a wall of grain coming at us,” said Roy Huckabay, an executive vice president at Linn Group in Chicago, said in a telephone interview July 2.
Two years removed from a devastating drought that damaged crops and sent prices surging, farmers will see yields rise 4.1% to an all-time high of 165.3 bushels an acre, government data show. Rising grain output in the U.S., the world’s largest producer, is keeping global food prices in check while boosting profit for meat producers including Tyson Foods Inc. and makers of sweeteners and ethanol including Archer-Daniels-Midland Co.
Futures have tumbled 21% since the end of April on the Chicago Board of Trade, slipping into a bear market on July 3. Prices today reached $4.0725, the lowest since Jan. 10. The Bloomberg Commodity Index of 22 raw materials dropped 3.5% over the same period, while the MSCI World Index of equities advanced 4.4%. The Bloomberg Treasury index gained 0.3%.
Corn’s slump may worsen once the harvest starts. In separate reports, Goldman Sachs Group Inc. said June 23 that prices will drop to $4 in six months, while Rabobank International said July 1 the grain will average $4.07 in the fourth quarter. Dan Basse, the president of AgResources Co. in Chicago, predicted a drop as low as $3.50.
As of June 29, 75% of the crop was in good or excellent condition, compared with 67% a year earlier and the highest at this stage of development since 2003, the U.S. Department of Agriculture said. After low temperatures delayed planting this year, the arrival of warm, wet weather accelerated plant development in June with about 5% already reproducing this week, up from 3% in 2013.
“Right now, it looks as good as it did last year when we had a record harvest,” Long said by telephone from Franklin, Illinois, where he farms about 3,000 acres with his son. “We have moisture in the ground and mild temperatures for successful pollination. We are ahead of the game.”
In Iowa, the top U.S. grower, fields show “phenomenal yield potential,” said Todd Claussen, director of agronomy at Ames-based Farmers Cooperative Co., the largest member-owned grain elevator and farm-supply company in the state. Claussen, who travels 55,000 miles a year scouting fields, said farmers planted more seeds per acre than ever and predicted yields in Iowa may near the record of 182 bushels an acre in 2009.
Improved output per acre is more than making up for a 4.4% drop in harvested acreage forecast by the USDA. Improved output in the U.S. will help boost global inventories by 8% next year to 182.65 million metric tons, the highest in 15 years.
Global output of all grain is forecast to be 2.5 billion metric tons, 18.3 million more than predicted last month, the United Nation’s Food and Agriculture Organization said July 3. Global food prices fell in June for the third straight month.