“Most of the increase in corn prices is fundamentally based. There’s always speculation involved, but there’s a reason, there’s a fundamental supply reason.”
Bill Bullard is an ag marketing consultant. We asked if the U.S. is trading food security for energy security.
“I think we could have. I don’t think we know that yet. It’s like in the presentation I was making a few minutes ago. We have enough this year, if we just make a decent size crop.”
Soybean, wheat and rice stocks are also tight.
“You’ve got three or four main U.S. commodities competing for the same acres, and we need more acres, but there’s not more acres out there.”
“I don’t think the people that were planning this really saw far enough ahead to really consider how we would produce this much corn and still have corn left over for food, for fuel, for exports.”
And if there’s a weather event that impacts corn yields and in turn the supply of corn, Bullard believes corn prices would soar to levels that seem unreal today.
“I think the government would intervene at a certain period of time because it would cause food prices to escalate all over the world. There would be tremendous pressure to get the corn price back down to keep food prices under control.”
Bullard doesn’t believe the ethanol mandates would be suspended.
“I think they’d be cut back some maybe ten or twenty per cent, and I also think the increase that we’re supposed to have in the mandate for the next couple of years, I think that would be waved probably.”
And there is a troubling scenario out there for the farmer.
“The real danger is the input cost is up. The government does something to intervene with the price, plus all that and then the farmer doesn’t have a good yield, then that could e a disastrous situation.”
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