Des Moines Register
08-12-06
U.S. corn crops near record
Demand for ethanol could boost prices by 18 percent over last year
By ANNE FITZGERALD
REGISTER AGRIBUSINESS WRITER
Despite unusually hot, dry weather across much of the Corn Belt this summer,
U.S. farmers are poised to harvest nearly 11 billion bushels of corn, the thirdlargest crop on record, and almost 3 billion bushels of soybeans, the government
said Friday.
A big corn crop is welcome news for farmers who have battled drought conditions
in parts of Iowa, but it's expected to depress market prices, the U.S. Department
of Agriculture said.
The agency trimmed a dime off its price forecast for corn in the marketing year
that begins Sept. 1, projecting a national average price of $2.35 per bushel. Even
so, that would be 18 percent higher than the national average price of $1.99 per
bushel expected in the current marketing year.
Booming demand from ethanol manufacturers has helped drive up corn prices,
market analysts said.
"That is a major factor," said Robert Wisner, an Iowa State University
Extension economist.
The Agriculture Department's projection for the year ahead showed increased
corn demand for domestic feeding and for exports, but "the biggest increase is in
ethanol," Wisner said.
Corn prices could go even higher than what the Agriculture Department projected
Friday, Wisner said, because usage in the new marketing year is expected to
exceed production by more than 800 million bushels.
"There's room for that to change, depending on the final size of the crop - this
year's crop and next year's," he said.
Higher prices would put more cash with producers and boost spending at Main
Street businesses, but they also would hurt livestock feeders and others who
must buy grain.
The Agriculture Department left unchanged its soybean price projection of $5.50
per bushel on average, 20 cents less than the expected national average price in
the current marketing year.
If realized, the projected U.S. corn crop would be 1 percent smaller than in 2005
and down 7 percent from 2004, the Agriculture Department said. Corn yields are
expected to average 152.2 bushels per acre, up 4.3 bushels from last year and
the second-largest on record.
The projected soybean crop will be 5 percent smaller than in 2005 and 6 percent
smaller than in 2004, with U.S. soybean yields averaging 39.6 bushels per acre,
3.7 bushels less than last year's record.
Iowa is expected to retain its standing as the nation's largest corn producer,
producing 2.14 billion bushels, nearly 20 percent of the projected U.S. total of 11
billion bushels. Iowa will also retain top honors in soybean production, although
Illinois, rebounding from last year's devastating drought, is on track to tie Iowa's
soybean production of 452.2 million bushels, or 15.1 percent of the U.S. total.
Corn and soybean production are expected to increase this year in Illinois,
Indiana and Missouri. In addition, corn production is expected to rise in Ohio,
while soybean production is expected to grow in Michigan.
Corn yields are expected to be higher this year compared with 2005 in the
eastern Corn Belt and in the Ohio Valley, where growing conditions generally
have been more favorable this year. In Missouri and the Ohio Valley, soybean
yields are expected to be unchanged or increase from a year ago. Market prices
fell Friday for both commodities.
Iowa cash corn market prices averaged $1.79 per bushel, down 12 to 14 cents,
while soybean prices averaged $4.92, down 4 to 6 cents. On the Chicago Board
of Trade, December corn futures prices fell 14 cents, closing at $2.41.