Drought potential means extreme uncertainty over 2013 corn prices

Prices will either rise or fall significantly next year, depending on supply and drought

December 14, 2012
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Purdue economist: US unlikely to dominate future corn exports

A Purdue University Department of Agricultural Economics report says that a return to closer-to-normal corn yields in 2013 could send prices downwards, but drought in some top corn-producing states could have the opposite effect. USDA predicts that prices on 2012 corn will be $7.60 per bushel, but that normal yields in 2013 could cause prices to fall by $2.10 to $5.50 per bushel. That would represent the largest ever year-to-year drop. According to the report, a crop larger than 14 billion bushels would mean that the market must shift from rationing corn use to strongly encouraging its use. However, such production levels are not assured, especially if a western Corn Belt and Great Plains states drought persists into the growing season. If that happens, prices would rise rather than fall, leading to continued uncertainty in the market. To read the report, click here.

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