Some economists have predicted recently the bull market in corn might be reversing to a two to three-year bear market.

Not so fast, counters Mark Welch of Texas A&M University.

“It’s not necessarily over, and I can make the case for volatility, both on the production and the price side,” says Welch.

 

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Judging from world per-capita consumption, it’s a good time to be a grain farmer, he says. “Grain use actually can go down in a recession, but that didn’t happen in the greatest recession since the Great Depression. We blew through that as if it was standing still. We were stepping up consumption prior to corn-for-ethanol making the difference that we’ve seen over the last several years. And that gave us the impetus to carry through the latest recession,” says Welch.

Even though the U.S. is making up a smaller percentage of world corn production, it is still the No. 1 producer and No. 1 user, though exports took a hit this past year, he says.

“We still set the stage for the world corn market. The estimate of 371 kilograms per person in per-capita consumption is a projection in light of the fact that we’ve capped off growth in ethanol. Our livestock numbers are down, but we’re still seeing worldwide growth in per capita consumption. There’s a lot more going on than just ethanol, and that’s what will carry us forward and provide that demand base which will provide for higher prices as we move into the future.”

World per-capita consumption for corn has grown by 28 percent and soybeans by 26 percent over the past 10 years, says Welch.

“World per-capita consumption of wheat is up 3.6 percent, when we are increasing our feed grain supplies and relying less on wheat as a feed grain. If you go back two or three years, consumption patterns of the food grains increase in wheat was flat – zero percent growth over 10 years. Now we’re seeing an uptick in wheat and in rice. So we’re seeing very strong consumption patterns in feed and food grains.

“In that 10-year period when we’ve seen rapid growth in feed grain consumption, where has the consumption come from? All of the growth and then some have come from corn. Everyone wants to be a corn producer, and everyone wants to buy corn.”