April 3, 2006

Corn price increase could mean tighter profits for feeders

Corn prices surged this week as a USDA report indicated that less corn would be planted this year.

Reduced corn production and higher grain prices could mean tighter profit margins for livestock feeders and grain processors, including ethanol manufacturers

Corn plantings this year will be down 5 percent to 78 million acres of corn, while soybean planting will increase 7 percent to 76.9 million acres, according to the US Department of Agriculture's annual prospective plantings report.

The report said most states across the Midwest displayed the same pattern ¡ª a decrease in corn acres and an increase in soybean plantings.

Cash market corn prices in Iowa went up Friday 6 cents per bushel from Thursday's average to US$1.95. Cash soybean prices dropped US$0.17 to average US$5.24 a bushel, according to the Iowa Department of Agriculture and Land Stewardship.

The decrease in corn acreage is being blamed on a few factors including high fuel and fertilizer costs and drought possibilities.