Brock said $7.50 corn, like $2 cotton, wasn’t good for U.S. corn producers. “What we’ve done is convinced other countries to raise corn again. All of a sudden, making corn over there is a lot more economical than growing wheat and sunflowers. Corn at $7.50 a bushel has caused us to develop some big competition that’s not going to go away anytime soon.”

As corn prices rose, the U.S. share of world corn exports slid from 63 percent in 2007-08, to 20 percent more recently. Meanwhile, Argentina’s share rose from 15 percent to 20 percent and Brazil’s, from 8 percent to 26 percent. Even the Former Soviet Union got into the act, going from 2 percent to 16 percent.

With last year’s big corn crop, the United States is starting to get some of that share back,” Brock said. But there’s a ways to go, with the U.S. share expected to be around 36 percent in 2013-14.

Perfect storm of demand destruction

Brock said the spike in corn prices from 2010-12 “was a perfect storm for a bull market. The ethanol industry was expanding and we had three disastrous corn crops back to back. Now the ethanol industry has matured and we’ve encouraged more corn production worldwide. That is a huge fundamental shift from where we were three or four years ago.

“History repeats itself. Once you hurt demand, it takes a long time to get it back. Corn at $7.50 is going to be one of the worst things that’s ever happened to us. This can take a long time to get back.”

Ethanol profits

Brock expects that ethanol plants will crush about 5 billion bushels of corn in 2013-14, because many have regained profitability on high gasoline prices and cheap corn. “We have 197 corn ethanol plants in operation in the United States right now. Two of them are expanding and 15 are idled and are not going to come back.”

Ethanol exports are expanding as well, primarily to Europe and Canada. “We also exporting a lot of dried distillers grains right now, with ethanol plants all fired up and running at full capacity. The biggest buyer is China. If you’re paying to export protein by the pound, you have a higher protein product in DDG’s versus corn, so you want DDG’s.”

Corn’s outlook could worsen should corn prices remain too high, too long as U.S. farmers get ready to plant. “A strong market will encourage more acres. But I think the more the corn price goes up in the next six weeks, the lower it’s going to go in July and August. It’s just basic economics.”

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