At least one prognosticator is suggesting that “due to an unusual confluence of factors” the price of corn could double to $8 per bushel in the next few years. In the April 9, 2018, issue of Barron’s, Simon Constable says these factors include “declining output, an ethanol-led demand surge in China and likely brutal weather.” (Corn Prices as High as an Elephant’s Eye?)
The growth in corn ethanol use helped fuel the farm equipment boom between 2008-14. Exports of the fuel additive have contributed to its increasing use during this period as the U.S. exported the fuel to 35 different countries in 2015.
Farm equipment manufacturers and dealers who reaped the benefits of the explosive growth of corn ethanol in the past decade with skyrocketing equipment sales, probably shouldn’t count on anything near that level of growth in the decade ahead.
If it isn’t a shortage of rail cars to haul grain, it’s this year’s weather itself that has given much of North American agriculture and the railroad industry an ongoing headache just getting product where it needs to be.
Both U.S. ethanol prices and production fell in 2012 compared with the previous year. And the chances are good that it won’t get a whole lot easier for producers in the year ahead.
Grain farmers say that purchasing the best seed available and utilizing the inherent advantages of cover crops are the some of the best investments they can make to improve crop yields and profitability.
The major influence in the corn market will be U.S. corn-based ethanol production. If the production of corn-based ethanol remains strong, corn prices will likely remain strong.
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In this episode of On the Record, brought to you by Associated Equipment Distributors, we take an initial look at the Dealer Business Outlook & Trends Report and what dealers are forecasting for 2025.