“Corn won the race for acres in 2007 by getting 15 million more acres of corn. Beans were the ones that gave up the acres. Beans had to get acres back this year and they did that by, we’re going to have something like eleven million more bean acres this year and about seven million lost corn acres.”
Bill Bullard is an ag marketer and says when farmers are deciding what to plant, they have to forecast profitability.
“Beans during the time when they were making the decisions about what to plant looked more profitable. Now in the last couple of months, corn has kinda taken the lead again, showing more profitability than the beans do, but most of the planting decisions have already been made, seeds have been bought. It’s too late to buy fertilzer. It’s too expensive.”
Ethanol continues to drive commodity prices.
“We’ve got to have a good enough corn yield this summer nationwide in order to have sufficient supplies for 2008 and that is because of ethanol. The corn usage in ethanol is going to be four billion bushels in 2008 and that is an amazing one-third of the corn crop.”
Without any changes in the renewable fuel standard, decreases in corn prices are unlikely.
“The ethanol usage is mandated by law by the government, so that much ethanol has to be produced, regardless of what the oil price is, regardless of what the corn price is, because the blenders in the fuel market have got to buy that much ethanol from ethanol plants, companies, in order to meet their mandate.”
And the mandate actually increases ethanol production in future years.
“Amazingly over the next couple of years that corn usage of ethanol goes up another half a billion to a billion bushels of corn, so it’s an ongoing problem. It hasn’t stopped here, it just continues to grow.”