January 7, 2008

Corn to reach US4.75 per bushel on stronger ethanol demand

Rising ethanol demand and lower corn acreage this year could push corn prices between US$4.25 to US$4.75 per bushel, according to Purdue University Extension Economist, Chris Hurt.

Hurt said the US corn acreage could decline by 6 percent in 2008 as all major crops are in short supply in the world, and some will outbid corn for land.

The shortest of the major crops are wheat and soy, and their prices are expected to drive acres away from corn in 2008, he explained.

Rapid growth for US ethanol plants is expected in the first half of this year, with capacity surging from the current 7.3 billion gallons to 11.8 billions gallons.

The growth indicates that the amount of corn required annually increases from about 2.5 billion bushels today to 4 billion bushels by July of 2008. Hurt further predicted that capacity requirement would grow to 4.5 billion bushels in the second half of the year.

It will not be until 2009 that corn production might be able to meet the growing demand, he concluded.