From Ohio to Kansas, corn is selling at startlingly high prices, so high that they are signaling the United States will run short of corn this summer.
If it does run short, the impact could be felt worldwide. Sales to big export customers like Mexico, Japan, South Korea, and China could take a hit as America grows 40 percent of the corn sold on the world market.
Domestically, sky-high prices could have U.S. millers suspending operations. If corn for feed costs too much than milk, egg and meat farmers could curtail production leading to higher food prices.
These continued high prices have also sharpened arguments by analysts that the government may not have a reliable picture of the shrinking stockpile. Some analysts say the Agriculture Department has over-estimated the supply, so that the situation is worse than it looks.
Their argument is built around the "basis," which is the difference between the local price for corn and the futures price in Chicago.
A strong basis is a signal to growers to sell their corn now, especially with a record corn harvest expected in the fall. But, this year farmers are not selling.
Prices on the cash market, where processors and livestock feeders buy corn for use today, have been unusually high for months. They are well above Chicago futures prices and much higher than historically at this time.
"Either farmers aren't selling or the corn isn't there," said Glenn Hollander, co-owner of Hollander-Feuerhaken, a Chicago brokerage and cash merchant. Even with strong basis, it was difficult to buy corn for domestic use, he said in late May.
In central Illinois, the basis was 53 cents a bushel above futures prices on Monday, half a dollar higher than a year ago. In Cincinnati, the basis was 30 cents above Chicago. In western Kansas, home to ethanol makers and cattle feeders, the basis from January-May was the highest in four years.
Scott Irwin, agricultural economist at the University of Illinois, says the corn isn't there. Irwin and Illinois colleague Darrel Good say the persistently high basis is evidence from the marketplace that USDA has over-estimated the corn supply.
"Basis is still screaming shortage," said Irwin in mid-May. "The problem is getting worse."
USDA TOO OPTIMISTIC?
USDA estimates the corn supply at the end of August, the annual low point before the fall harvest, will be adequate for exporters, millers, and livestock feeders, although at 851 million bushels it will be the smallest in 16 years.
There are ways to stretch the supply. Livestock producers could feed wheat instead of corn to their animals and the early spring planting season means some of this year's corn crop will hit the market early.