Wednesday, February 13, 2008
Predicted Corn Carryover
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I advise ranchers that the best way to observe (and even predict) corn prices is to watch the Carryover projections. The lower the carryover, the higher the annual corn price. Ending stocks as a % of Total Usage is that carryover. Most analysts will use carryover as their predictor of annual corn prices. Researchers have even developed a statisitical historical relationship between carryover and corn prices.
Note that 2007/08 projected carry over is even lower than the 2006/07 carryover. Also note how low the 1995 carryover was when we had the last run-up in corn prices. This all suggests, at least to me, that corn prices are going to some higher in 2008. This all is even before we take the growing season weather into account.
I am suggesting corn prices will be in the high $4.00s range for 2008 -- up another dollar over 2007s.