March 14, 2007

USDA sees market spurring strong corn planting for ethanol, feed

Market signals in the form of strong corn prices will spur farmers to plant more this year, providing the needed grain to produce both ethanol and livestock feed, US Department of Agriculture Deputy Secretary Chuck Conner said Tuesday (Mar 13).

"The market signal here is to plant more corn because we need it for the ethanol as well as for the feed," Conner told the US House Appropriations Subcommittee on Agriculture. "We have pretty good confidence within the USDA that that market is going to work and we're going to see quite a bit of additional corn acreage."

Earlier this month, the USDA predicted that farmers will plant 87 million acres of corn this year, producing 12.195 billion bushels. That would be a substantial increase from the 78.3 million acres planted last year, according to USDA data. The 2006 production estimate was for 10.535 billion bushels.

Strong ethanol production and the fuel's demand for corn has put a squeeze on livestock producers who need corn-based feed.

"They are getting squeezed at this point and we understand that and appreciate that fact, but we believe that the market dynamics here, if given the opportunity, are going to go a long way towards solving this problem," Conner said. "We have producers all over the country--because of the price of corn--are contemplating heavier corn acreage."

He said many farmers will be switching from soybeans, wheat and cotton to corn.