Ethanol fuels rising corn prices
Washington ? Ethanol plants and foreign buyers are gobbling the nation’s corn supplies, pushing prices as high as $3.40 a bushel, the Agriculture Department said Friday.
Farmers haven’t seen prices this high for more than a decade – a range of $3 to $3.40 a bushel, according to the new crop forecast. That’s up 10 cents from December.
In Douglas County, corn farmers are enjoying the rising prices. Last year they harvested nearly 3 million bushels from 27,500 acres, enough to bring in $5.6 million.
“If that average goes up, say, by 80 cents (a bushel), year over year, that’s a lot of money,” said Bill Wood, agriculture agent for K-State Research and Extension in Douglas County. “At least for the foreseeable future, it’s going to really help us.”
The robust prices, however, have made corn more expensive to feed livestock.
“It makes a lot of difference,” said Doug Wewe, who raises cattle in Pretty Prairie, west of Wichita. “We’ve got to keep them gaining weight. In the cold weather we’ve had, they don’t gain weight, and they eat more.”
Wewe feeds his cattle around 4,800 pounds of corn, about 85 bushels, each day.
High prices have forced some producers to switch to hay or other feed, but the dropoff in feed use was more than offset for corn farmers by growing demand from foreign markets, according to the crop report.
Strong demand is eating into corn supplies, which are expected to drop from nearly 2 billion bushels to 752 million bushels.
That doesn’t mean people will have less corn to eat; corn for livestock and fuel is different from sweet corn, the source of fresh corn on the cob and canned or frozen corn.
Eventually, sustained high corn prices probably would lead to higher grocery bills, but so far there has been no boost in what consumers pay for beef or pork.
Overall, the 2006 corn crop came in at 10.5 billion bushels, slightly under last month’s forecast of 10.7 billion bushels. Anticipated yields were 2.1 bushels less per acre, and the area planted and harvested was slightly smaller than expected.
The amount of corn used for ethanol, forecast at 2.15 billion bushels, was unchanged from last month.
Exports are forecast to claim 2.25 billion bushels of corn from last year’s crop, up from last month’s forecast of 2.2 billion bushels.
Corn prices on the futures market rose Friday by 20 cents a bushel, the maximum allowed on the Chicago Board of Trade, to $3.96 1/2 a bushel.
Highlights from a new crop report released Friday by the U.S. Department of Agriculture:
¢ The just-harvested soybean crop was estimated at 3.18 billion bushels, down less than 1 percent from last month’s forecast and up from the 3.06 billion bushel crop in 2005. The price estimate tightened from $5.70 to $6.50 last month to $5.75 to $6.45.
¢ Analysts predict a rise in wheat production this year, after several down years. Analysts said winter wheat plantings rose 9 percent to 44.1 million acres; the price forecast was unchanged from last month at $4.15 to $4.45 a bushel.