Corn growers in the northern and eastern Corn Belt regions are currently struggling to decide whether to accept prevented planting payments, take a chance at planting corn in June or switch to another crop. Meanwhile, the corn market is trying to estimate just how much 2011 corn that U.S. farmers will both plant and harvest.

“Out of the 92.2 million acres that USDA projected would be planted to corn this spring, we’re probably down to a little less than 91 million acres that might actually be planted,” says Chad Hart, Iowa State University agricultural economist. “Even in normal conditions, we would have expected to harvest around 85 million acres, out of the 92.2 million projected acres planted.  With plantings below 91 million acres, I expect harvested acres to be down at least a million acres, as well. That would put us in the 83- to 84-million-range for corn-harvested acreage.”

As a result, global corn stocks are likely to remain tight for another year or so, says Hart. “The U.S. produces 40% of the world’s corn, so if we’re behind in production, the world is behind, too,” he points out.

Corn isn’t the only feed and food product with tight supplies right now, adds Hart. U.S. wheat growers in the southern plains are currently coping with drought while growers in the northern plains are contending with cold, soggy soils. On the other side of the globe, China is having wheat production problems, as well.

“China’s feed grain situation is pretty tight,” says Hart. “Their food and feed wheat crops are struggling, and they are the world’s largest wheat producer. China is also second in corn production behind the U.S.”

Having tight global supplies of both wheat and corn at the same time generally favors higher-than-normal prices for both crops, says Hart. “U.S. corn farmers are in a good spot right now – there seems to be more upside potential than downside,” he adds.

Still, a surge in oil prices might be all it takes to tumble commodity grain prices, notes Hart. “Normally high energy prices help to boost corn prices,” he says. “However, if oil rose to $125/barrel, more than likely it would decrease corn prices, because our export demand would decrease significantly.”

USDA recently confirmed that China had purchased some U.S. corn in March. However, Hart says that it’s still anyone’s guess as to whether China will make any more U.S. corn purchases again this year or next.

Although it may be pricey, farmers might consider making some moves now to protect their price floor against a possible future price drop, without having to guarantee delivery, advises Hart. “When you see a market that is bouncing around like this corn market has for the last few months, it shows how volatile the market is,” he says. “High volatility in a market means a high cost for price protection.”

Market concerns are even higher over the remaining 2010 corn crop than the potential 2011 corn crop, notes Hart. As evidence, he cites the current cash corn market in the central Corn Belt.

“Right now (June 1), there is a 35-40¢ basis in cash prices over what nearby futures prices are offering for mid-September,” he says. “The bottom line is that the grain elevators and ethanol plants in central Iowa are recognizing that there might not be enough corn to be had come late August and early September.”

Given the late planting that has gone on this year, not many farmers will be able to take advantage of the attractive price premiums being offered for early September delivery, even if farmers planted early maturing varieties, notes Hart. “On the other hand, we’re still seeing nearby futures prices a good $2/bu. above what production costs are,” he says. “So, there’s likely going to be more opportunities for corn farmers to lock in a very profitable price, whether they deliver early or not.”