Farmers play corn rouletteby Mark Steil, Minnesota Public Radio
Tomorrow could be a pivotal day for U.S. farmers this year. That's when the U.S. Agriculture Department releases it's spring planting outlook. The rapid rise in ethanol production has turned this usually routine report into a much anticipated event. Farmers, grain traders and even Wall Street investors will be looking for answers in Friday's numbers. The question is, how many acres of corn will U.S. farmers plant this year?
Worthington, Minn. — Nearly everyone expects a substantial increase in corn acres this year, maybe 10 percent or more over last spring. Corn is the main ingredient for most of the nation's ethanol production. As more and more ethanol fuel is produced, it's increased demand and the price for corn.
Many farmers, like Bob Braun, will plant more corn this spring to take advantage of the higher prices.
"We're going to plant about 14 percent more acres of corn this year, than we did last year," says Braun.
Braun and his two brothers farm in southern Minnesota. All three are busy this morning in the shop getting machinery ready for spring planting.
Braun says the pending USDA report could be a major event for the corn market. Most private analysts expect U.S. farmers will increase corn acres anywhere from 8 to 12 million acres over last year. Braun says the price of a bushel of corn could change significantly depending on what the report says.
"If they come in with lower acres than we think we need I could see corn jumping a buck," says Braun. "Or if we come in with a couple million more acres than we think we need, it could drop."
Agriculture Department officials have surveyed the nation's farmers in recent months about their planting intentions for the report. Sometimes there are drastic changes between intentions and what really goes in the ground. Some actual planting numbers are already starting to come in from farmers in the southern part of the U.S.
"Most of the corn has been planted in my part of the country," says Mike Newberry who farms in southwest Georgia. He raises corn, cotton and peanuts.
"We have a 30 or 40 percent increase down here in corn acres. And most of those acres are coming at the expense of cotton. And some are coming at the expense of peanuts."
Newberry says his personal corn plantings are more modest. He's increased corn production about 10 percent over last year.
Newberry's experience illustrates where most of the new corn acres will come from. Farmers are expected to plant less cotton, wheat and soybeans in favor of more corn. Georgia farmer Newberry says the switch to corn could produce some nice profits.
"We should expect at harvest to get four dollars and better for the corn," says Newberry. "Which is very, very good. We haven't seen that in many, many years at harvest time."
Along with the good news, more corn brings a host of concerns. Some marginal pasture and grasslands will be converted to corn. Environmental groups worry that could increase soil erosion. Cattle, hog and poultry producers are concerned rising corn feed prices will increase their cost of production.
Southern Minnesota farmer Bob Braun is already feeling that. He and his brothers also raise hogs.
"We're running pretty close to break even right now on the hogs," says Braun. "But we can roll that profit on producing the corn over to the hog operation if we need to, to justify it."
Braun is one farmer who wonders if the high corn prices will last. He says it could all disappear quickly if farmers plant too many acres.
Those sorts of concerns reach all the way to Wall Street. A lot of pension and bank funds are invested in the corn market and in ethanol plants. Braun says the corn market is so volatile right now it offers an almost mind-numbing set of possibilities.
"Once in a while I wake up in the middle of the night and think about it a little, yeah" says Braun.
The upcoming USDA report could add another twist to the list of possibilities.
Since spring planting in the midwest is still a few weeks away, some farmers may change their corn plans depending on what signals the report sends. This could increase uncertainty about the true size of this year's crop.
- Morning Edition, 03/29/2007, 7:40 a.m.