Reduced plantings and rapidly increasing consumption of corn will magnify the importance of the 2006 growing season, said a
"With consumption having the potential to balloon to 11.5 billion bushels in 2006-07, a crop of at least 10.4 billion bushels is needed to maintain an ending stocks-to-use ratio of 10 percent," said Darrel Good. "A
"That yield appears modest in context of the average yields of the past two years, but is only about 5 percent below trend yield for 2006. The market currently reflects a substantial increase in the average price of corn for the 2006-07 marketing year, so that a significant reduction in stocks is already in the market. Still, prices could be quite volatile during the growing season if periods of adverse weather surface."
Good's comments came as he reviewed the corn market, which is currently characterized by surplus stocks. But, he noted, corn consumption is increasing rapidly.
"Corn demand is expected to remain strong into the 2006-07 marketing year and beyond," said Good.
"Mostof the focus in the corn market has been on the growing ethanol market and the implications for future price and production. That focus has been justified by the rapid growth of ethanol production. For the current marketing year, however, recent surprising developments center on feed and residual use and exports of corn."