Gene technology trumps lousy weather to boost US corn crop

Despite the lousy weather, US government statistics point to a record crop for 2009 and much of the credit could be due to recent advances in the genetic alteration of corn seeds to make the plants more resilient.

 

Genetic technology developed by companies such as Monsanto Co. is changing the math for farmers as they figure out what crops they are going to plant. They might shift to favour corn over soy, for which genetic innovation lags.

 

While bigger crops could add additional short-term pressure to the price of corn, which is off almost 17% from its January high, farmers could still enjoy good prices come harvest time thanks to economic recovery, relatively tight global supplies and growing demand from end-users, such as ethanol makers and livestock producers.

 

Last year was characterised by a very wet, late planting season followed by a rainy fall, which delayed the harvest. A portion of the crop still has not been harvested, and the longer it sits in the field the more vulnerable the plants are to falling over, or becoming difficult or impossible to harvest. Still, farmers enjoyed a relatively cool, benign summer, which meteorologist Mike Tannura credits for the bumper corn crop.

 

The USDA earlier this month estimated the nationwide corn crop for 2009 at 13.151 billion bushels, with an average yield of 165.2 bushels per acre, both all-time records. The yield came in higher than anyone in the industry had forecast and is more than 7% higher than 2008's. The USDA also projected a record soy crop, although its growing season, particularly the harvest, was not as troubled as that of corn.

 

While the pleasant summer helped, farmers give much of the credit to advances in corn-seed technology, such as "stacking" desirable genetic traits in a seed to protect against multiple threats such as rootworm and drought. Growers said the plants now have better root systems to capture moisture and stand tall in harsher weather.

 

"It's a comfort factor that I know the genetics will fill in the yield," said Garry Niemeyer, a corn and soy farmer in Auburn, Ill. "We'll at least hold our own or do better, even in a tough year like we've just come through."

 

Crop prices and the costs of inputs such as fertiliser and energy largely dictate planting decisions, but the seed technology has given farmers added incentive to continue planting corn instead of soy, even though planting corn every year might deplete the soil and reduce yields.

 

Analyst Rich Feltes said that in the heart of the corn belt, where land rents are highest, farmers are becoming more comfortable planting corn in consecutive years, getting away from a traditional, yearly corn-soy rotation, because they want to ensure the highest possible return, even if that means spending more on fertiliser and other inputs.

 

Though the financial benefit to corn farmers from genetically modified crops is somewhat mitigated by the seeds' higher cost, the prospect of boasting a huge yield of, say, 200 bushels per acre or more is tough to refuse. Additionally, outside of Europe there is limited resistance to genetically modified crops.

 

According to the US government, 85% of the corn crop last year was GMO compared with only 40% in 2003. It will undoubtedly be even higher in 2010, Feltes said.

 

It is already looking like a big year for total corn planting, which would weigh on prices. Some analysts are expecting corn acreage could climb by as much as five million acres, above last year's 86.5 million acres, due in part to the fact that the USDA has projected a sharp reduction in planted wheat acres this year. A late soy harvest prevented many winter wheat farmers from planting this autumn, and farmers have also shied away from wheat because of low prices. That would leave more acres to be planted to corn or soy.

 

Still, the economic recovery and a mandate from the federal government to increase the amount of ethanol in transportation fuel could mean the slump in corn prices is short-lived. In addition, the fact that 2009's delayed harvest kept some farmers from preparing their fields for this year could cap the growth in acres planted with corn, said analyst Chad Henderson.