June 25, 2007

 

US corn farmers to depend on rains for bumper profits

 

 

US corn farmers are seeking Mother Nature's help for bumper profits as what they have earlier anticipated in planting the grain this spring with hot and dry weather threatening the eastern Corn Belt and the entire year's crop.

 

Crop conditions were better in areas west of the Mississippi River but farmers there also were hoping for rain.

 

This year's demand for corn has been surging due to ethanol as well as with exports and livestock feeders.

 

US President George W. Bush, in his State of the Union address in January, called for the use of 35 billion gallons of renewable fuels by 2017 to reduce gasoline consumption by 20 percent. Industry forecasts predict that up to 6.5 billion gallons will be distilled this year, up from 5 billion in 2006.

 

About 27 percent of this year's projected US corn crop is expected to be used for ethanol, up from 20 percent in 2006, according to the US Agriculture Department.

 

The competition for supplies sent corn futures prices to a 10-year high of US$4.37-1/4 this February at the Chicago Board of Trade, the world's largest grain trading exchange.

 

However, crop conditions already are starting to deteriorate as the USDA reports this year's corn crop was rated 70 percent good to excellent as of June 17, down from 78 percent at the start of the month.

 

The rise of the ethanol industry has made major impact on US agriculture as more farmers devoting more of their fields to corn.

 

US farmers planted 90.724 million acres of corn this year, the largest since 1944, according to a closely watched estimate by Memphis-based consulting firm Informa Economics. The USDA was scheduled to release its acreage estimate in late June.

 

Amid the huge corn acreage, cash prices remain on the high levels as many processors and elevators have been forced to raise their bids to stay competitive with the ethanol plants that have been mushrooming throughout the Corn Belt.

 

Field conditions have been poor since early spring. Rainy weather during April and early May kept many farmers from starting their planting tasks in a timely fashion.

 

When the crop was finally in the ground, hot and dry weather arrived, pushing temperatures to above 90 degrees Fahrenheit (32 Celsius), well above average for June, on some days.

 

The combination of heat and the lack of moisture made a double whammy in recent corn plantations which also slowed the growth of the soybean crop.

 

But the corn is believed to recover if significant rain arrives before the crucial pollination stage in the next few weeks. During the pollination stage, pollen falls from the tassels at the top of corn stalks to the silks below, which determines the number of kernels on each ear of corn.

 

Some areas of the Midwest received some much-needed rainfall earlier in the week in time for corn leaves who have been curling in the midday heat. However, the arrival of rains were less widespread than forecast.

 

Though scattered showers provide relief to most of crops, it is still inadequate as most areas faced with lacklustre soil moisture conditions.

 

Corn planted in late May has suffered more and is noticeably shorter than corn that was sown earlier in the season.

 

But farmers were still hopeful that the poor conditions will not wipe out profits they had in while working out their budgets during the winter.