Government report may lead farmers to plant less corn

ON THE FARM

April 08, 2007|By Ted Shelsby

With the demand for ethanol pushing up corn prices in recent months, agriculture officials expected farmers to ramp up corn planting for the coming growing season.

But they didn't expect such a large increase.

A recent survey by the U.S. Department of Agriculture shows that farmers across the nation plan to plant their biggest corn crop since World War II.

And yet no sooner was the data released than did the second-guessing begin among farmers about the best course for the coming year.

According to the crop prospective plantings report released March 30, the nation's farmers plan to sow 90.5 million acres of corn, 15 percent more than last year. The report traditionally is a closely watched projection that farmers use in making their final planting decisions.

Maryland farmers followed the national lead, though their plans are less drastic. State farmers said they intend to plant 550,000 acres of corn this spring, a 12 percent increase over last year and the most since 1992.

The new interest in corn is stimulated by President Bush's push for alternative fuels and a goal of reducing gasoline consumption by 20 percent over the next decade. Ethanol, a gasoline extender made from corn, is a key component of that effort.

The bigger corn crop is coming at the expense of soybeans, both in Maryland and throughout the country, according to the survey. For the nation as a whole, soybean planting is expected to total 67.1 million acres, down 11 percent.

Maryland farmers plan to sow 430,000 acres of soybeans this year, a drop of 9 percent from last year. This would be the smallest number of acres since 1987.

These numbers could change because many farmers who have seen the USDA report might alter their plans, said Kevin McNew, president of Cash Grain Bids Inc., a commodity research firm based in Bozeman, Mont.

It's the commodities market that has many of the farmers reconsidering, McNew said. The government report had a significant impact on the corn market, with the price dropping the maximum 20 cents a bushel March 30, the day the data came out. Prices fell another 14 cents on Monday and 3 cents on Tuesday, before rising 15 cents at midweek.

In Maryland, the price of corn has dropped from about $4.30 a bushel three weeks ago to $3.60 last week, McNew said.

"My guess is that the corn acreage will be a little lower than predicted in the USDA report," he said. "Soybean prices have risen about 90 cents a bushel, and this will prompt some farmers to switch from corn to beans."

The federal report is good news for grain growers, but not so good for dairy and poultry farmers, Maryland Agriculture Secretary Roger L. Richardson said. Corn and soybeans are the primary ingredients in livestock feed.

Although corn prices have declined in Maryland recently, Richardson anticipates them holding at a level well above recent years.

"This is going to give farmers an opportunity they haven't had in a few years: to contract their corn at a profitable price," he said.

Richardson, a grain farmer, said farmers struggled to pay their bills in recent years when corn was selling for $1.90 to $2.10 a bushel.

Melvin Baile Jr. also puts himself in the second-guessers category. He farms about 800 acres near New Windsor in Carroll County and is rethinking his crop selection decisions for the year.

"I don't believe that farmers are going to plant 90 million acres of corn," he said. "Not with fertilizer prices where they are today."

He said the cost of a ton of fertilizer has nearly doubled in two years. It costs about $75 more to plant an acre of corn than an acre of soybeans.

"I was going to plant more corn. But now, I not so sure," he said last week. "I might switch 100 acres real quick. I don't know. The challenges are so great, I feel like I'm on mental overload."

He compared the commodity market to a wild roller coaster ride.

"It's a thrill one minute, making you feel like you're on top of the world, and it makes you sick in your stomach the next," the 46-year-old Baile said. "The risk is greater than anytime in my life. You can make a case for $2.50 [per bushel] corn this year as well as $5.50 corn."

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