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What '07 Corn Rush Means To You
Hoping to cash in high prices, Iowa farmers are using the most land since 1985 to plant corn. But the trend could have profound environmental implications, experts warn.Oh, ph*que the "experts"... Washington, D.C. - With grain prices soaring, U.S. farmers are set to seed more land to corn this spring than at any time since 1944, when the government was pressing growers to alleviate wartime food shortages. Farmers intend to plant 90.5 million acres of corn this spring, a 15 percent increase from 2006, according to a widely anticipated report issued Friday by the U.S. Agriculture Department. Barring bad weather, that's good news for everyone from grocery shoppers to ethanol producers and hog farmers, because the big crop would help moderate prices for corn and food. U.S. farmers have faced an international backlash over surging grain and food prices, brought on by the nation's booming fuel ethanol industry. Critics, from meatpackers to environmentalists, have warned that the United States cannot fuel the country's cars while keeping food prices affordable to the poor. Iowa farmers are increasing their plantings of corn by 10 percent, to 13.9 million acres. That's the most in 22 years, though shy of the record 14.4 million acres of corn that Iowa growers planted in 1981 when President Reagan ended the Soviet grain embargo. "It's good news that the corn industry is stepping up to the plate to fill the demand," said David Nelson, a Belmond corn and soybean grower who is chairman of Global Ethanol LLC, which operates an ethanol plant at Lakota. Nelson and his two brothers will plant about 70 percent of their acreage to corn this year, up from 63 percent last year, he said. Agriculture Secretary Mike Johanns said the report should "help to ease concern about our corn supply." He dropped the idea of letting landowners remove idled acreage without penalty from the federal Conservation Reserve Program, which pays farmers for taking land out of production and putting it into grass, trees or other soil-conserving uses. The land could have been planted to corn in 2008. There's still plenty of risk that farmers won't plant as much corn as predicted, if wet weather in April keeps them out of the fields. The USDA's report, based on an extensive survey of farmers, exceeded analysts' expectations, and corn futures dropped the market limit of 20 cents per bushel on the Chicago Board of Trade. The price of corn for May delivery fell to $3.74 a bushel. But stocks of corn are so tight, down 13 percent from a year ago, that poor growing conditions could send prices soaring later in the year, analysts said. "It's too early to tell whether this crop will be large enough to satisfy demand or not," said Larry Salathe, a USDA economist. "It's pointing in the right direction." The chairman of the Senate Agriculture Committee, Iowa Democrat Tom Harkin, said the increase in corn acreage "should help to address concerns about corn supplies." But he cautioned that "higher production in response to strong prices can also lead to oversupply and lower prices." The big increase in corn acreage could also raise environmental concerns. Corn generally requires more pesticides and fertilizer to grow than most major crops. Excess nitrates from fertilizer can run off fields into streams and rivers, a concern to Des Moines and other cities that must treat the water for drinking. "Dramatic expansion of corn production for the ethanol industry has profound environmental implications that are being almost entirely ignored in Washington," said Ken Cook, president of the Environmental Working Group, a research and advocacy organization. More than ethanol producers, livestock farmers and food processors have been awaiting the USDA report for weeks. Cook even invited readers of his blog to offer their guesses of the survey's outcome. Friday's numbers were welcome news to livestock producers, although they'll be watching nervously to see if farmers grow as much as they've told the Department of Agriculture they will. Corn is used to feed cattle, hogs and poultry, so higher corn prices mean consumers are likely to pay more for meat and dairy products. It takes about 10 bushels of corn to raise a hog and 50 bushels or so to fatten one steer in a feedlot. Hog producers are "cautiously optimistic that this (increased corn acreage) will help us in the short term," said Dave Warner, a spokesman for the National Pork Producers Council. "Much will depend on the weather and other factors," said Bill Roenigk, chief economist for the National Chicken Council. "And even with the increased acreage, there is little doubt that corn will remain at historically high price levels." The cost of producing a chicken has gone up 40 percent since last summer because of the higher corn prices, he said. The increase in corn acreage means that farmers will plant less land to soybeans. However, soybean processors got some good news Friday in a USDA report showing that stocks of the commodity are 7 percent higher than they were a year ago. Increased production of soybeans in South America also is expected to help compensate for the reduced U.S. acreage. In Iowa, farmers expect to plant 9.2 million acres of soybeans this year, down from 10.2 million in 2006. Nationally, soybean acreage is expected to fall from 75.5 million last year to 67.1 million in 2007, a drop of 11 percent. In the South, many farmers are switching from cotton to corn. Cotton acreage is expected to fall by 20 percent. The shift to corn should moderate corn prices, while boosting prices for soybeans and cotton, said Joe Victor, a commodities analyst for Allendale Inc. Iowa is the No. 1 producer of corn and soybeans. With last year's average yield of 166 bushels per acre, Iowa would produce 2.3 billion bushels of corn this year, surpassing the 2004 record of 2.2 billion bushels. The state's average yield in 2004 was a record 181 bushels per acre. Farmers in Illinois, Minnesota and North Dakota all intend to plant record amounts of corn this year. Illinois farmers plan to plant 12.9 million acres, up 1.6 million from 2006. What, you don't wanna see any stories on the 'Burg about corn futures? Tough. It's April 1st... Posted by: Dave D. 2007-04-01 |
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