Corn prices in the Midwest now cost more to produce them, and U.S. farm income is headed for a 14-year low. Researcher AgResource Co. now estimates a $50 loss for every acre sown on average. The USDA previously forecast net farm income will drop to $54.8 billion this year, the lowest since 2002 and half the record of $123.3 billion in 2012.
Related: Trouble on the Farm
Last week’s USDA report showed Brazilian Corn production was expected to fall to 81 million metric tons. Private forecasters are shaving another 5 million metric tons off this figure, which would bring the crop size down to 76 metric tons. The latest lowered estimate is close to what Michael Cordonnier of Soybean and Corn Advisor called a worst-case scenario in late April, when he said Corn could fall to 75 million tons, instead of the projected 79 million tons. To say that the drought is severe is an understatement. In the US, plantings are at 75%, which is well ahead of the 70% 5-year average. It is interesting to note that Indiana, the fifth largest corn producing state, is only at 45% plantings progress, versus the 5-year average of 61%. Corn is also emerging ahead of pace. According to estimates, 43% of the nation’s Corn crop has emerged, versus the 5-year average of 34%. The strength of the Crude Oil market has provided very strong outside support for the grain market. The US Dollar Index continues to rebound, which could test Corn traders’ resolve,” according to OptionsExpress.
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