Over the last four years, more than 40 percent of corn production in the US was used in biofuel applications. But now as the EPA proposes to back down on the mandate that 10 percent of all gasoline be fortified with corn ethanol, corn producers are expecting a rise in inventory and therefore a drop in future corn prices. In fact, the USDA announced today that the planting of corn is projected to be 4 percent lower in 2014 than in 2013. After the price of grain went down at an exponential rate last year, some farmers are steering away from planting corn and turning to soybeans instead. Soybean acreage will rise to 81.493 million acres planted, a record high, from 76.533 million last year, the government said.
“Soybeans have also seen price drops over the last nine months, but at a much lower rate,” said Frost & Sullivan Industry Manager Christopher Shanahan. “As a consequence, corn prices did see some short term upward spikes in future prices, but nowhere close to mid-2012 to mid-2013 levels. We expect that food price growth will moderate in 2014, which is good news for the consumer.”