March 12, 2009
Higher ethanol mandate may not boost US corn prices or plantings
An increase in US ethanol production may not translate to higher corn prices or plantings this year, analysts said.
To boost corn prices and plantings, better exports and higher corn feeding are required but that isn't happening so far, said Gavin Maguire, analyst for Ehedger.
The USDA said in February that farmers would plant 86 million acres of corn this year, but analysts said that figure is overly-optimistic.
Expensive fertilisers combined with national crop insurance rates recently set at US$8.80 per bushel for soy and US$4.04 for corn will likely mean less corn acreage and more soy than a year ago.
The producer has a safety net but it favours soy over corn, said Don Roose, analyst and president of brokerage US Commodities in West Des Moines, Iowa.
Roose expects soy acres to increase from the 75.7 million seeded last spring, while corn acreage will decrease from the 86 million planted in 2008, especially if the price of fertiliser - key to producing large corn yields - does not come down soon.
The first official USDA forecast for 2009 plantings will be released on March 31.
