November 7, 2006
US corn acreage expected to soar in 2007
The strong demand for corn from the ethanol industry and export customers is expected to push US corn planted acreage in the spring of 2007 to levels not seen since the World War II era, a Purdue University extension economist said in a press release Monday (Nov 6).
"There's no question at this point that we're going to need a massive increase in corn acreage in 2007," said Chris Hurt, a Purdue University agricultural economist. "That increase is driven primarily by ethanol, but we also have very strong export demand. That export demand is driven mostly by the fact that there is a fear that corn supplies are going to be very tight in the US and that prices will be much higher."
About 2.1 billion bushels of the 2006 corn crop will be used for ethanol production at the 106 ethanol plants currently on line. By the end of 2007, an additional 1.4 billion bushels could be needed to supply the 53 new or expanded ethanol plants in operation, according to the press release, citing data from the
"In terms of acreage, I've been suggesting that we may have to push acreage up to 88 million to 89 million acres of corn. That would be a 10 million acre increase from 2006 and would put us at the highest acreage planted in the US since 1946. We'd be looking at a 60-year phenomenon," Hurt said.
During and after World War II, American farmers planted a large amount of acres to help feed European allies, Hurt said. In the years after the war, the development of higher-yielding corn hybrids and other agricultural advances made it possible to grow more corn on fewer acres.
This year's corn planted acreage was 78.6 million acres. Hurt said with the increased acreage, and by dipping into ending stocks, corn use in 2007 could approach 12.5 billion bushels, with production needed to be about 12.2 billion bushels.
This year the US Department of Agriculture forecasts US farmers will produce 10.91 billion bushels, the third-highest total on record, but down from last year's 11.11 billion.
With demand for US corn high and 2007 potential corn production unknown, corn prices could go through the roof, Hurt said, especially if there are adverse events to impact output. He is estimating corn prices in the US$3.40 per bushel range for the 2007 crop. This compares to USDA's estimate of US$2.60 per bushel for 2006.
Should farmers follow economic trends and dramatically increase their corn acres, they'll have to grow fewer acres of other crops, the release noted. Cotton acreage in the south-east and spring wheat acreage in the northern US Plains could drop.
"But those are fairly marginal acreage numbers--maybe one or two million acres. Most of those 10 million additional acres of corn will have to come from here in the Midwest. In order to get that acreage, it largely has to come from soybean acreage," he said.
In 2006, US farmers planted 75.6 million acres of soybeans.
