since the financial crisis of 2008 caused a collapse in global demand for food and fuel.
lowest levels ever recorded, at just 5 percent of the total corn used, said Hart, the Iowa State specialist.
“It’s just confirming that supplies are lower than we thought, and demand is better than we thought, and when that happens you see prices bidding up,” said Chad Hart, an Iowa State University grain marketing specialist.
The report shows that just 745 million bushels of corn will be stockpiled by August this year. That’s down from about 1 billion bushels in August 2010.
It can take months for higher grain prices to work their way to the grocery store. Raw ingredients are just a fraction of the cost for processed foods. But companies like Hormel Foods Corp. have already announced price increases of more than 3 percent this year. Higher grain costs will put more pressure on them to pass costs along to consumers. U.S. corn production dropped 5 percent in 2010 to 12.4 billion bushels. Still, it remained the third-highest output on record. The record was set in 2009, when 13.2 billion bushels of corn were harvested. At issue is the amount of grain being carried over from year to year. That surplus creates a buffer for global markets. The report shows that corn stockpiles are among the
“That’s a significant drop,” Hart said. “Normally, we like to keep those levels above 10 percent.” Anthony Prillaman, an analyst with the USDA’s National Agricultural Statistics Service, said weather was the key factor in the lower production. “Everything shows that normal or above normal temperatures in August reduced the yield potential for corn,” he said. “They were above normal and stressed the crop.” Hart said demand continues to rise, with the ethanol industry the area of fastest growth. The largest overall demand continues to come from the livestock industry. Lower stockpiles are also evident with soybeans, wheat and cotton, Hart said. “Things were already really thin with soybeans and have been for
FACING PAGE | An ear of corn sits on a stock as Tim Recker harvests a field near Arlington, Iowa. Increased commodity prices and strong demand have sent prices of farmland skyrocketing, making it more difficult for young and beginning farmers to get established but strengthening the balance sheets for those who own the land.
Farming equipment and grain silos are silhouetted against a setting sun near Farmingdale, Ill. Increased prices for corn and other crops have caused prices of farmland to climb with Illinois, Indiana, North Dakota and South Dakota seeing a average increases ranging from 8 percent to 11 percent.
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