US Corn Production and Commodity Prices
The production of corn plays an important part in the overall economy of the United States. The US is by far the world’s largest corn producer, having 96 million acres of farmland dedicated to corn production. corn production is mostly dominated by west and north central Iowa and eastern Illinois. Approximately 13% of the annual yield is exportable. Corn prices are highly sensitive to various factors such as weather and genetically modified corn, which can greatly affect corn production in different parts of the country.
Production of corn in the United States follows a pattern which begins in late spring and continues through the summer. Corn is most productive in the spring due to the warm temperatures and rains experienced during that period. Mid to late summer also sees a peak in corn production in corn futures trading. However, corn futures prices tend to revert to higher levels between late summer and early fall, especially corn for soybeans, which is the most traded agricultural commodity in the United States.
Growth in corn production is closely related to planting. In order to get the highest productivity from the land, it is necessary for farmers to plant the best quality corn. Corn is most profitable when it is planted in a high-quality, rich soil with adequate water supply. Corn can be planted almost anywhere it is allowed, although the western part of the country has become a common place for planting corn. One of the most expensive areas for planting corn is Iowa, which is due to the high availability of water. Some of the corn grown in Iowa is used as animal feed, but most corn is sold as corn futures or corn grain for livestock feed.
The U.S. corn market follows a supply-demand perspective. When the prices are high, the supply is low and when they are low, the supply is high. This has a direct bearing on the corn market. When the supply is high, corn futures prices will typically rise and when they are low, corn yields will drop. As such, the key to successfully hedging against supply and demand effects is to properly monitor the corn market and its movements on a daily basis to determine the most profitable times to plant corn based products.
The USDA has published its own version of the market value of planted corn. This per-acre cost of production index was first published in November 2008 and represents the value of corn produced on an area of land per year. While it represents a good comparison across different types of crops that are similar to corn, it has some flaws. For example, this doesn’t factor in the costs associated with the machinery that corn farmers use which can drive up the price per unit.
To accurately gauge the impact of weather on crop production, it is best to contact a local agriculture office or university. An estimate of crop production can be provided by contacting your local Extension Service as well as the USDA’s National Marine Fisheries Service. A reputable agricultural agent will be able to help you obtain the appropriate information for your particular region.