Pub. 8 2013-2013 Issue 5

www.nebankers.org 28 Extraordinary Service for Extraordinary Members. W hile corn acreage in the United States grewat an ac- celerating pace from 2010 to 2012, it stabilized at a re- cord 97million acres in 2013 and is now set to lose ground in 2014 for the first time since 2008. Record-high returns drove acreage expansion in the U.S. and abroad, led by Brazil and Argentina, which contributed to the rising impor- tance of corn as agriculture’s leading crop in total revenues. However, corn prices are now hovering near three-year lows, pushing the soybean/corn price ratio higher and suggesting amajor shift in acreage to come. Global supplies of corn have re- bounded from last year’s drought- impacted harvest in the U.S. with the world production estimate up 11 percent in 2013, coupledwith a 20 percent jump in inventories by next summer. As a re- sult, corn prices have steadily declined since their peak in August 2012, and U.S. stockpiles are expected near the highmark of 2.0 billion bushels. Thanks to China’s insatiable appetite for corn and competitively priced U.S. corn on the world market, China is expected to import record amounts of corn over the next year, supporting U.S. exports. In the U.S., top producing states include Nebraska in third place with a 12 percent market share, preceded only by Iowa and Illinois, and followed by Minnesota and Indiana. Over the past decade, Nebraska corn farmers have maintained their market share of the U.S. market, and thus are expected to continue to play a leading role going forward irrespective of an overall corn acreage decline to come. After several years of global acreage expansion, corn producers around the world are expected to respond to low corn prices by pulling back on acreage, leading to smaller corn supplies by the end of 2014. Following large export gains over the past couple of years, South America may very well see smaller exportable supplies in 2014. By comparison, the U.S. is set to recapture that market share loss over the last several years with corn exports surpassing 1.5 billion bushels again in 2013-2014. The U.S. can count on the resilience of global demand for corn coupled with record exportable supplies. Meanwhile, domestic demand is expected to stay relatively flat with corn for ethanol at 4.9 billion bushels/ year to produce just over 13 billion gal- lons which is essentially the market for 10 percent ethanol blends in the 130 billion gallons/year gasoline market. By comparison, feed use should finally resume a growth path with low prices encouraging corn feeding, led by the poultry and pork sectors while the beef Corn Acreage Set to Lose Ground in 2014 Mike Borowski and Duane Divis , MetLife Agricultural Investments