CHICAGO — Wet weather that delayed corn planting may send global inventories to their lowest in 37 years, signaling higher costs for consumers and livestock producers.
More than one-third of Midwest fields were planted after the mid-May target for optimal growth because of excessive rain, and Ohio farmers as of June 5 were the furthest behind since 1989, with 58 percent sown, government data show. Goldman Sachs said Monday that the disruptions increase the "potential for a shortfall."
Corn futures more than doubled in the past year to $7.365 a bushel in Chicago and may top $9 if conditions worsen, according to Morgan Stanley. The rally is boosting costs for meat producers and ethanol makers as global food inflation tracked by the United Nations accelerated in nine of the past 11 months.
"There's potential to take out record highs this summer for corn," said Richard Feltes, a vice president of research at R.J. O'Brien & Associates, a broker in Chicago. "There's a lot riding on the need for our weather to normalize and not be characterized by this regime of extremes that's really been the pattern since last fall."
In a report today, the Department of Agriculture probably will cut its forecast of global corn reserves before this year's Northern Hemisphere harvest to 121.46 million metric tons, according to a Bloomberg News survey of 15 analysts. That would be down 17 percent from last year, the biggest drop since 1994, and would leave supplies at 14.5 percent of estimated consumption, the lowest ratio since 1974, government data show.
Analysts also are expecting the USDA may cut its estimate of reserves before the 2012 harvest. While the Bloomberg survey showed corn inventories probably will rebound to 127.21 million tons next year, that would be down from a May forecast of 129.14 million.
According to the Army Corps of Engineers, floods damaged as much as 6.8 million acres of farmland across the South and Midwest, an area equal to the size of Massachusetts. From the Mississippi River Delta region, where heavy rains and snow melt from the north forced governments to open levees, to the pathways of the Missouri and Ohio rivers, high waters have wrecked farmland.
"The weather has definitely challenged the ability of farmers to sow their crops," said Hussein Allidina, the head of commodities research at Morgan Stanley in New York. "That's going to limit ultimately the amount of acres that get planted."
About 5.5 million acres, or 6 percent of the 92.178 million that corn farmers said they intended to plant this year, were still waiting to firm for heavy farm machinery as of Sunday, the USDA said. An estimated 79 percent of the plants that were sown emerged from the ground, below the 90 percent average for the past five years.
Yield potential begins to decline in fields planted after the middle of May because crops reproduce during the peak of summer heat in July and August, according to Iowa State University. Excessive soil-moisture supplies from heavy rains from Arkansas to Ohio may leave plants with shallow root systems and vulnerable to yield losses.
"We needed a perfect growing season to rebuild inventories to a more comfortable level," said Alexander Bos, an agricultural commodity strategist for Macquarie Group in New York. "Prices will be volatile and trend higher for an extended period of time to slow demand and provide incentives for farmers to expand acreage next year."
Crops may recover before the harvest begins in the Midwest, the biggest growing region, in September and October.
"There's still a chance to have reasonably good yields if we can normalize summer weather and stay away from an earlier- than-normal frost rate this fall," said Feltes, of R.J. O'Brien. "We are going to need to extend the growing season to bring this late crop home."