Jul. 23, 2013
Iowa, the nation’s king of corn production, will have to import some of the prized kernels because this season’s dicey crop won’t meet demand, an analyst said Tuesday.
A couple obig reasons: ethanol plants are returning to full production and livestock operations are growing and need more feed.
Ross Korves, economic policy analyst for Michigan-based ProExporter Network, said it’s a rare situation that comes because flooding delayed spring planting, and a year earlier, drought shriveled the state’s usual shining yields.
Korves addressed the Iowa Farm Bureau Federation’s Economic Summit at Iowa State University.
This year’s Iowa corn forecasts are running at a reduced 149 bushels an acre, better than last year’s 137 but far lower than the goals that easily run into the 180s, Korves said. As it stands, Iowa is expected to come in below the projected national average of 152 bushels per acre.
“A whole lot of people are worried about what is going on in Iowa,” Korves said.
A drop in corn prices brought ethanol plants back toward full production, and livestock operations, with the exception of cattle, are expanding at least modestly.
That increases demand for corn, used for animal feed and converted to ethanol. Korves said Iowa will end up buying 221 million bushels of corn, most likely from other states, not from other countries. Iowa is expected to grow about 2 billion bushels of corn.
No bordering state is in Iowa’s predicament. All will end up with net exports of corn, from 584 million bushels leaving Illinois to the 63 million shipped from Wisconsin.
With Iowa using so much of its own corn, the nation now looks to North Dakota to help build reserves. But that state left 4.4 million acres unplanted this spring — double the initial federal estimate and far more than Iowa’s 200,000 to 400,000 unplanted acres — due to weather difficulties, Korves said. “That’s an astronomical number,” he added.
The 4.4 million is equivalent to one-fifth of North Dakota’s 22 million crop acres.
Iowa’s poultry and pork projection is expected to jump up a percentage point or two, but cattle production continues to drop, said economist John Anderson of the American Farm Bureau Federation.
That means continued high beef prices, and consumers are noticing, Anderson said. Some are choosing cheaper meats.
“We still have consumers who are exceedingly cost-conscious,” Anderson said. “Demand has been good but not phenomenal.”
Anderson expects beef production to drop more over the next year or two before rebounding.
Jeff MacKenzie of Orascom, which is building a large fertilizer plant near Wever, predicted the central U.S. will begin to dominate the market. Fertilizer prices should settle in at $400 a ton, down from $700, he added.
“The U.S. went from having the most expensive natural gas in the world to having the cheapest,” MacKenzie said. Natural gas is used to make anhydrous ammonia, a common corn fertilizer.
Partly because of that, he expects corn to hover around $4.37 a bushel most of the time, but it will be higher now and then.
Iowa will have to import corn | The Des Moines Register | desmoinesregister.com