Big Report Numbers Could Yield $5 Corn ? and Lower Feed Costs for Dairies

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Dairy sector hopes for more corn acreage, lower prices in USDA?s March 30 Prospective Plantings report.

Is $4 or $5 corn possible? Yes, if USDA?s March 30 Prospective Plantings report shows 94 million acres for the yellow-eared crop in 2012.

"That would be a huge deal for dairy producers," says dairy trader Robin Schmahl of AgDairy LLC.

Already in a recent outlook, USDA has indicated that it anticipates 94 million acres of corn for 2012, Schmahl says. That acreage number -- the highest in 68 years ? means the U.S. could be looking at a big crop and, perhaps most importantly, an ample carryover of 1.6 billion bushels by year-end 2012.

"If that happens, we could be looking at $4 corn," Schmahl says. "With corn at that level, dairy producers won?t slow down milk production. They haven?t slowed yet."

2011?s strong milk prices and this year?s mild winter have helped boost U.S. milk production. In its World Agricultural Supply and Demand Estimates released March 9, USDA increased U.S. milk production by 700 million pounds from February, to 199.7 billion pounds.

"That?s getting close to 200 billion pounds, which could be an all-time high," Schmahl says.

On the corn side, a good-growing season for those 94 million corn acres could result in 14 billion bushels of corn, says James Dunn, professor of agricultural economics at Pennsylvania State University. That compares to last year?s 12.3-billion-bushel crop.

Dunn believes a big corn crop could push prices down to the $5 per-bushel range. He?s not alone. "The CME is trading March corn at $6.50 and December corn at $5.40, which means they see lower prices in the fall," Dunn says.

Read more at http://www.agweb.com/livestock/dair...ld_5_corn_?_and_lower_feed_costs_for_dairies/
 
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