US production beginning to catch up with demand
Corn prices, which averaged $6 per bushel in 2011, may decline in the next decade as U.S. production begins to catch up with demand, according to reports.
The average cash price is predicted to fall to $4.54 in the 2013 marketing year beginning September 1, then rise to $4.82 by 2022, according to analysts from the U.S. Congressional Budget Office. Corn futures closed at $6.3175 per bushel on January 30 on the Chicago Board of Trade.
Slower growth in the use of corn for ethanol is “giving trend corn production a chance to catch up and surpass demand growth,” said Keith Collins, a former U.S. Department of Agriculture chief economist. Yield gains may not keep up with Congressional Budget Office predictions, and year-to-year variations in supply and demand may be greater than forecast, said Collins.
Corn use is expected to rise by 14 percent to 15.198 billion bushels by 2022. Production is predicted to rise 8.6 percent, to 15.19 billion bushels, as a 12 percent gain in yields absorbs a 42 percent hike in exports (to 2.63 billion bushels) and an 8.5 percent gain in ethanol use (to 5.425 billion bushels) by 2022, according to analysts.