By Darrel Good Department of Agricultural and Consumer Economics University of Illinois
The recent period of growth in the U.S. corn industry appears to have peaked. The domestic ethanol market has hit the E10 blend wall and will be dependent on consumption of higher blends in order to expand total domestic consumption and to increase corn consumption. The domestic livestock industry is also mature and may require larger exports for production growth. Finally, the corn export market has become a lot more competitive in the past several years as high corn prices have stimulated an increase in world production. If the size of the U.S. corn market has peaked, a period of lower prices and reduced acreage may be required. Lower prices would be beneficial for the livestock industry, at least initially. Lower crop farm incomes might result in some downward pressure on farm land prices, particularly if interest rates continue to increase. Making plans for such an adjustment seems prudent, while at the same time hoping for a surprise development on the demand side.