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Northwest corn production increases
Increased local corn production will help relieve pressure on dairies by increasing options for affordable feed alternatives. Most of the corn grown in the Northwest is used for local feed. Expensive feed has been a major concern for livestock producers. To combat these worries, an additional 95,000 corn acres were planted in the Northwest in 2023 (up 14.5% year over year). Northwest corn silage grew to 11.2 million tons, up 19.1% year over year. Washington nearly doubled their corn silage, up 48.4% year over year. Corn for grain production also increased 5.5% from the previous year.
Bearish corn and soybean prices
Bearish corn and soybean prices are likely here to continue in the near term. The average farm price for corn decreased from $6.54 per bushel for the 2022-23 crop to $4.80 per bushel for the current crop. The soybean average farm prices also decreased to $12.75 per bushel, $1.45 per bushel lower than the previous year. A record-breaking domestic harvest and an improving South America crop are creating a bearish outlook for corn and soybean prices. According to the USDA, the 2023 U.S. corn crop was a record 15.34 billion bushels. Soybean production fell by 2.5% year over year to 4.16 billion bushels. Weather conditions in South America have varied but most weather-related concerns are gone. Argentina, the fifth-largest corn and third-largest soybean producer, benefited from abundant rainfall and doubled its expected soybean output. On the other hand, Brazil, the largest soybean and third-largest corn producer, is still suffering from dry conditions and its crop estimates could shrink further. However, production increases in several large corn-producing countries (China, India and Argentina) will more than offset Brazil’s smaller crop. The large U.S. corn crop increased stocks resulted in a 25% year-over-year decline in export prices. The USDA lowered their price forecasts for the current corn and soybean crop.
Corn and soybean production by country, 2022-23 and 2023-24 crop
Shipping challenges persist
The global demand for U.S. corn has remained strong despite headwinds from shipping challenges. Drought conditions are impacting the water supplies to Panama Canal's lock system. This has limited the number of ships passing through the canal each day, reducing cargo capacity and increasing the transit fees for grain transporters. As a result, U.S. corn exports from the Gulf have largely been re-routed through the Suez Canal. Shipping through the Suez Canal is more cost effective, but it can add more than a week to shipping timelines and several cargo ships have been attacked in the area. Despite these challenges, sales and shipments of U.S. corn were 39% higher than the previous year and U.S. corn remains globally competitive.
For more information or to share your thoughts and opinions, contact the Business Management Center at 866.552.9193 or bmc@AgWestFC.com.
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