U.S. farmers are stockpiling corn supplies

Corn has declined for six consecutive quarters, the longest losing streak since 1959, according to data compiled by Bloomberg. Increased planted acreage and prospects for a bumper crop have put pressure on prices. As a result, U.S. farmers are now stockpiling corn at levels not seen in nearly four decades.

The latest figures from the U.S. Department of Agriculture show that about 91.5 million acres have been planted to corn this year, about 1.5 million acres more than forecast in March. Bloomberg estimates were about 90.3 million.

Corn futures fell amid the latest estimate from the U.S. Department of Agriculture indicating the crop is in great shape for the start of the July pollination season. That sent prices in Chicago to about $4 a bushel, or down half as much as the April 2022 market of $8 a bushel during uncertainty caused by war in Eastern Europe.

Bloomberg noted Sunday that U.S. farmers now hold the largest corn stocks since 1988. This is primarily due to high production costs and falling grain prices.

“U.S. farmers, who are the world’s biggest corn producers, are holding off on early-season sales as prices for the key grain fell to $4 a bushel for the first time since 2020. Russia’s war in Ukraine and weather problems in South America over the past few years have given U.S. farmers an edge in the battle for a share of global demand,” the media report said.

Meanwhile, falling grain prices and rising input costs are toxic for farmers. A recent USDA forecast shows that farmers are in for another year of financial misery.

USDA expects the largest drop in revenue since 2006 and several years of financial suffering by the end of this year.

“With this expected decline, net farm income in 2024 will be 1.7 percent below the 20-year average (2003-2022) of $118.2 billion and 40.9 percent below the 2022 record high in inflation-adjusted dollars,” the USDA report said.

At the same time, farmers are witnessing a rapid decline in their leading role in the global grain market. Decades of dominance of corn exports were shattered last year by Brazil. And Argentina recently sent its first shipment of corn to China in 15 years.

Tags: corn, USA, stocks