MORGAN STANLEY: A Farmer We Spoke To Had Bad News About Corn Supplies

However, it was known that we wouldn't even know the full extent of the damage until harvest time and beyond.

This morning, Morgan Stanley commodities analyst Bennett Meier reports on discussions he had with Richard Guse, a corn farmer in Minnesota, on the outlook heading into 2013's planting season.

It is not good.

Guse says he basically has no grain reserves to draw from, and projects "old crop" (leftover 2012 yield) prices to remain high at around $8.

Old crop corn stocks remain precariously tight. Richard commented that stocks at his local elevator, full at this time last year, are virtually non-existent as farmers hold tight to what little stocks they have left.

Richard estimated that farmers would begin to sell from remaining stocks at cash prices above $7.50/bu, with sales accelerating above $8/bu. (According to the USDA, cash prices in Iowa traded at $7.37/bu on Friday.)

Guse says prices should come down a bit this summer as long as weather remains "normal," but says corn prices won't begin to fall back to even $5 until there are two consecutive regular planting seasons.

May '13 corn prices were trading around $7.12 this morning.