Corn prices collapsed this week on the heels of a USDA report projecting a sharp increase in corn acreage this year. According to the Projected Plantings Report, US farmers could plant a whopping 93.6 million acres of corn, the third largest figure in modern history.
This figure was especially surprising since corn prices are relatively low, a fact that would typically discourage farmers from planting the grain. Instead, they will likely increase corn acreage by 6.3%, which could lead to a massive oversupply of corn if growing weather is good.
As a result, prices for this year’s crop collapsed to a new low, with December corn trading Friday for a mere $3.66 per bushel.
It’s not all doom and gloom in the Midwest, as soybean prices climbed to an eight-month high this week, which may encourage some farmers to try and plant more soybeans in place of corn.
Meanwhile, ethanol producers, livestock feeders, and food manufacturers all benefit from lower corn prices, which they can capture by using the futures markets.