Chicago: Wet weather that delayed corn planting in the United States, the world’s largest exporter, may send global inventories to their lowest in 37 years, signaling higher costs for consumers and livestock producers, Bloomberg reported.
More than one-third of Midwest fields were planted after the mid-May target for optimal growth because of excessive rain, and Ohio farmers as of June 5 were the furthest behind since 1989, with 58 per cent sown, government data show. Goldman Sachs Group Incorporated said on June 6 that the disruptions increased the “potential for a shortfall.”
Corn futures more than doubled in the past year to $7.365 a bushel in Chicago and may top $9 if conditions worsen, according to Morgan Stanley. The rally is boosting costs for meat producers including Tyson Foods Incorporated and ethanol makers such as Poet LLC, as global food inflation tracked by the United Nations accelerated in nine of the past 11 months.
“There’s potential to take out record highs this summer for corn,” the Vice-President, Research, R.J. O’Brien & Associates, Mr. Richard Feltes. “There’s a lot riding on the need for our weather to normalise and not be characterised by this regime of extremes that’s really been the pattern since last fall,” he added.
In a report today, the US Department of Agriculture probably will cut its forecast of global corn reserves before this year’s Northern Hemisphere harvest to 121.46 million metric tons, according to a Bloomberg News survey of 15 analysts. That will be down 17 per cent from last year, the biggest drop since 1994, and will leave supplies at 14.5 per cent of estimated consumption, the lowest ratio since 1974, government data showed.
Analysts also are expecting the USDA may cut its estimate of reserves before the 2012 harvest. While the Bloomberg survey showed corn inventories probably would rebound to 127.21 million tons next year, that would be down from a May forecast of 129.14 million.
Floods damaged as much as 6.8 million acres of farmland across the South and Midwest, according to the US Army Corps of Engineers, an area equal to the size of Massachusetts. From the Mississippi River Delta region, where heavy rains and snow melt from the north forced governments to open levees, to the pathways of the Missouri and Ohio rivers, high waters have wrecked farmland.
“The weather has definitely challenged the ability of farmers to sow their crops,” said Hussein Allidina, the Head, Commodities Research, at Morgan Stanley in New York. Mr. Hussein Allidina, said, “That’s going to limit ultimately the amount of acres that get planted.”
About 5.5 million acres, or six per cent of the 92.178 million that corn farmers said they intended to plant this year, were still waiting to firm for heavy farm machinery as of June 5, the USDA said. An estimated 79 per cent of the plants that were sown emerged from the ground, below the 90 per cent average for the past five years.
Yield potential begins to decline in fields planted after the middle of May because crops reproduce during the peak of summer heat in July and August, according to Iowa State University. Excessive soil-moisture supplies from heavy rains from Arkansas to Ohio may leave plants with shallow root systems and vulnerable to yield losses.
“We needed a perfect growing season to rebuild inventories to a more comfortable level,” an agricultural commodity strategist for Macquarie Group Limited. in New York, Mr. Alexander Bos, said.
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Corn-crop delays in US signal tight supply