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Feb. 21, 2011 Source: The Brock Report Following Wednesday's supply/demand update, USDA Secretary Tom Vilsack expressed confidence U.S. corn supplies would be sufficient to meed demand. "I think there's going to be enough corn for food, for feed, for fuel and for export opportunities," he told reporters. However, Vilsack may be forced to change his tune if we see a repeat of last year's crop problems this summer. Based on USDA's corn carryout forecast, supplies at the end of the marketing year will be at the minimum level needed to keep the cash supply pipeline operating properly. If the U.S. finds itself faced with weather-reduced corn yields for a second year in a row, there's now a distinct possibility the federal government may be forced to step in and take action to reduce the federal ethanol mandate or at least suspend the blender's tax credit. Such action could potentially bring the corn bull market to a screeching halt. It will probably take a disaster to force such government action. However, one thing seems certain, is that the food/fuel debate will heat up along with the crop acreage battle in coming weeks. The political pressure to do something to ensure corn for the food and livestock/poultry industries will be intense by summer. Tweet |
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