Dwindling Corn Stockpile Fuels Sharp Jump In Price Shortages Could Force Some Ranchers To Slaughter Livestock Early

News that the nation’s stockpile of corn has fallen to its lowest level in nearly 60 years sent corn futures prices surging Friday to historic highs on the Chicago Board of Trade.

The combination of a shortage of feed corn and high prices could force some ranchers to send their livestock to slaughter early. That prospect is particularly onerous to ranchers who already are absorbing losses from low prices.

The U.S. Department of Agriculture released its report on corn stocks Friday. Prices also were influenced by a separate report that showed just a modest increase in farmers’ spring planting plans.

Analysts predicted the corn stocks were so low, at 3.8 billion bushels, that shortages could occur this summer before the fall harvest becomes available. Stocks are 32 percent lower than they were this time last year.

“We’re going to have to make a steeper cut in corn feed usage from now through the end of summer,” said Iowa State University economist Robert Wisner.

The jump in corn prices could nudge retail food prices higher from the current forecast of a 2.2 percent increase for 1996. That’s because cattle and hog producers have reason to sell off herds, avoiding huge feeding costs. In the short term, that’ll put meat supplies on the market. In the long term, it reduces the breeding stock, forcing meat prices higher.

“Slowly but surely, the prices at (supermarkets) will rise” over the next few years, said Kenneth Gassman, a livestock industry analyst at Davenport & Co. in Richmond, Virginia.

Separately, the USDA said wheat supplies in storage totaled 825.8 million bushels, down 15 percent from 969 million bushels at this time a year earlier, also the lowest since 1987, when the USDA changed to a March 1 snapshot of supplies instead of April 1.

Wheat futures rose 4.5 cents to $5.02 a bushel shortly before the close.

Traders also are concerned over future supplies of winter wheat, though rainfall in recent days has helped this year’s crop.

Shifts in commodity prices like those Friday could affect farmers’ planting decisions.

In particular, farmers could decide to plant corn instead of soybeans under current market conditions.

A new farm bill giving farmers more planting freedom while phasing out government payments cleared Congress early Friday and will be signed by President Clinton next week.

Farmers are planning to increase corn acreage 12 percent this year, to 79.9 million acres nationwide, slightly under most market forecasts, the Agriculture Department estimated.

Soybean plantings are estimated at 62.5 million acres, virtually unchanged from last year.

The 1995 corn harvest fell after government programs curbed corn planting, and wet spring weather forced some farmers to plant soybeans instead of corn.

Soybean stocks were at 1.19 billion bushels, down 13 percent from a year ago but in line with expectations.