In as few as four weeks we could begin to see early fieldwork take place across the Corn Belt. Fieldwork could easily be earlier than normal this year, given the lack of snow cover and dry soils.

If producers do get in the fields early, there is a much better chance of them planting an increased number of corn acres. History also indicates that the earlier planting takes place in the United States, the better yields tend to be.

The price ratio between new-crop corn and soybeans continues to heavily favor corn production, as well. At present this ratio stands at 2.38:1. This means it takes just 2.38 bushels of corn to equal the value of 1 bushel of soybeans. Historically, this ratio is closer to 2.5:1. Some traders take this as an indication soybeans will need to push for new-crop acres.

Others claim the fact the spread has actually widened means the corn complex has secured all of the acres it needs, and neither grain needs to extend bids at this time.

We will also begin to see temperature warm over the next several weeks across the Corn Belt. While this is good for producers wanting to head to the fields, it can cause issues in on-farm stored grains. This is from the condensation that can be caused as temperatures start to climb.

It is normally in a producer’s best interest to move any stored grain before this happens, especially if the bins that are holding it do not have a ventilation system.

There are concerns over the decreased demand we have seen recently for corn from the ethanol industry. This is coming from an overall decline in gasoline demand compared to a year ago. Compared to last year, U.S. gasoline demand on a whole is down 5 percent. While this does not seem like a significant volume, the impact on ethanol stocks is large.

Gasoline usage in the United States this year is projected at 138 billion gallons. Given the 10 percent ethanol blend rate used, this equates to 13.8 billion gallons of ethanol demand. This is still 8 million gallons above the government-mandated blend rate.

If U.S. gasoline demand continues to drop, either this blend rate will need to be increased, or the United States may need to increase its exports to prevent an oversaturation of the market.

Trade generally believes increased corn demand from China will offset any potential decline in other uses. This may not be accurate, however, as the growth in China’s corn demand is not taking place as fast as some believe it will.

China is forecast to increase its corn purchases by 200 million bushels per year, compared to the 600 million-bushel growth rate we saw in ethanol during its expansion phase. China is also taking measures to increase domestic corn production, which will restrict its import needs.

There is another factor that could greatly alter all corn supply and demand estimates that have recently been released. This is the possibility of a rebound in corn production. According to data from the firm F.C. Stone, the United States has lost 2.2 billion bushels of corn production from drought in the past two crop years.

If even a portion of this lost production would be negated, it would be more than enough to compensate for the increase in projected usage.

Karl Setzer is a Commodity Trading Advisor/Market Analyst at MaxYield Cooperative. His commentary and market analysis is available daily on radio, in newsprint and on the Internet at www.MaxYieldCooperative.com

The opinions and views in this commentary are solely those of Karl Setzer. Data used for this commentary obtained from various sources believed to be accurate.

This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.