November 21, 2006

 

US corn acreage for 2007 to be the highest since 1946

 

 

The expanding biofuels industry and high export demand adds up to what could be the largest US corn acreage in several generations, Chris Hurt, Purdue University agricultural economist, said.

 

He predicts corn prices would eclipse US$3 a bushel for the 2007 marketing year and could threaten the 1995 record of US$3.24 a bushel.

 

There would be a need for a massive increase in corn acreage for 2007, Hurt said adding that increase was driven primarily by ethanol, but that there was also a strong export demand. The latter was driven by the fear of tight corn supplies in the US and much higher prices for the same.

 

Considering the above scenario, corn acreage might have to be pushed up to 88 million to 89 million acres, putting the US at the highest corn acreage planted since 1946.

 

Earlier, American farmers increased corn acreage in the 1940s to help feed European allies during and after World War II. In subsequent years, the development of higher yielding corn hybrids and other agricultural advances made it possible to grow more corn on fewer acres. In addition, they also undertook crop rotations, that is growing corn on land one year and soy the next to lower the risk of soil-borne diseases, insects and weed infestation.

 

This year farmers planted about as many acres of soy as corn. Corn production for 2006 was forecast at 10.9 billion bushels, at an average yield of 153.5 bushels per acre, according to the USDA.

 

Out of this, about 2.1 billion bushels of the 2006 corn crop was going into ethanol production which could further increase by the end of 2007, to feed new or expanded ethanol plants, according to the Renewable Fuels Association.

 

The presence of more than 150 plants could be capable of producing nearly 9 billion gallons of ethanol per year.

 

With corn demand running high and 2007 production still a question mark, Hurt believed corn prices could go through the roof.

 

Should farmers follow the economic trends and dramatically increase their corn acres, they would have to grow fewer acres of other crops.