Worries about last year’s damaged corn crop have vanished with a glance at this season’s cornfields. With favorable weather across most of the United States, experts and markets expect a crop about 30 percent larger than normal. Farmers that planted planning on selling into an extension of last year’s shortage could even lose money, as prices have fallen by almost half since last year. I hope that the corn ethanol factories that closed last fall because of high corn prices can reopen in the next few weeks — otherwise, much of this year’s outsized crop could go to waste. A plentiful supply of corn can also mean lower prices for milk and meat, not right away, but by the end of the year. Prices of meat and milk pushed up by the high corn prices of the past three years may return to levels that consumers won’t balk at. Gasoline prices also should decline with lower costs for corn ethanol, though the effect will not be large enough to notice.
The large corn crop is bad news for corn growers who have unusually high growing expenses, and for Brazil, which expects to export less ethanol this year with more ethanol production from U.S. corn.