January 15, 2007

 

US farmers sell corn as prices hit 10-year highs
 

 

Many US farmers on Friday, Jan 12 sold into a blistering rally that took corn prices to fresh 10-year highs, but some held out in hopes that prices would rise further boosted by demand from the ethanol sector.

 

Most farmers have already sold a large portion of the crop they harvested last year, and have marketed a larger than usual amount of new crop corn that would be cut in the fall.

 

The recent rally has injected producers with a renewed bullish optimism, which could have many farmers reluctant to sell more grain at current price levels, dealers said.

 

Corn futures rose 80 percent in value in 2006.

 

Many producers also forward-contracted a larger than normal portion of their yet unplanted 2007 crop last year as prices looked attractive at the time.

 

That however, turned out to be a mistake, pointed out University of Illinois extension economist Darrel Good.

 

Considering the uncertainty of the growing season ahead, he said farmers would be more cautious in their moves.

 

Much of the new crop corn was sold when prices reached decade highs during the fall, a time when prices typically fall.

 

Shrinking corn stocks and increasing competition for corn among livestock feeders, exporters, and ethanol producers were seen driving the recent gains in corn prices.

 

According to chief USDA economist Keith Collins, corn demand for ethanol production could grow by 1 billion bushels in 2007 from the previous season which would mean additional 6.5 million corn acres in 2007.

 

Grain industry analysts have predicted corn seedings would increase by 5 to 8 million acres in 2007.