Corn prices are rising, but so are expenses, risk for farmers
(Published Saturday, April 7, 2007 11:43:41 PM CST)
A d v e r t i s e m e n t
By Gina Duwe/Gazette Staff
Mel Shotliff is planning to plant about 500 more acres of corn this year on his rural Evansville farm. That's a 40-percent increase from the 1,250 acres he planted last year.
But the surge in corn acres that will be planted in coming weeks comes with risks, he said.
Ethanol production is driving up corn prices, but expenses are going up, too, making it "really kind of scary and stressful," Shotliff said.
In Rock County, analysts expect farmers to mirror a national trend by planting about 15 percent more corn that the 152,000 acres planted last year. Shotliff thinks the increase could be 20 percent or more.
Nationally, farmers are expected to plant 90.5 million acres of corn, according to the U.S. Department of Agriculture. That would be the most corn planted since 1944.
Weather is a big factor, though, in getting all the seeds in the ground, said a grain merchandiser at one of the Midwest's largest suppliers of food grade corn and soybeans.
"It's definitely early yet, and the weather is not extremely cooperative right now," said Tim Lange of The DeLong Co. in Clinton.
A higher demand for corn, in large part because of ethanol, is pushing up corn prices, said Jim Stute, crops and soils agent at UW Extension. There are now 114 ethanol refineries nationwide-including one that started production last month in Milton-and another 80 under construction.
The corn price in Evansville closed at $3.39 a bushel Thursday. Corn had been stuck at around $2 a bushel for years before the ethanol boom lifted prices.
But the market has yet to regain its 40-cent drop after the USDA released its March 30 planting prediction report. The report showed more corn would be planted than expected, and the price dropped, Stute said.
"When there's more than what the demand for ethanol and feed and exports is, price goes down to sell it," he said. "But the wild card now is we have to worry about getting the crop in the ground."
WEATHER A FACTOR
Moisture is not a concern like it has been the last couple years. The planting process is slightly delayed in the Midwest because the soil is too wet, Stute said.
"If this kind of weather goes on Weather a factor
Moisture is not a concern like it has been the last couple years. The planting process is slightly delayed in the Midwest because the soil is too wet, Stute said.
Rock County farmers tend to start planting corn around April 15, but there's plenty of preparation before that, he said.
"The ground is just way too wet," he said. "It'll take awhile to warm up and dry the ground out now."
But if all the corn can't be planted by May, yield potentials drop, Stute said, and if there's not enough corn, prices go back up.
"I'm thinking there's some guys that think they're going to plant that extra 200 acres, but at the last minute might switch back to beans," Shotliff said, because it will be getting too late.
IMPACT OF MORE CORN
More corn means less soybeans planted-about 11 percent less than 2006 and the lowest acreage since 1996, the USDA predicts.
That shouldn't pose a problem for biodiesel producers, who use oil from soybeans to make the biofuel, said the vice president of the company building a plant in Evansville.
"We have record stores of soy oil. There's lots of soy oil in supply," said Jeff Pieterick of North Prairie Productions. "I don't see it (less soybeans planted) as a bad thing at all. It's good for the farmers."
Soybeans and corn typically are rotated year-to-year. Corn yields aren't as high, and more nitrogen fertilizer is needed when corn is continuously planted on the same land, Stute said. That creates a higher cost per acre because of increased chemical use. Crop rotation alone can typically bring a 10- to 15-percent boost in yield, Stute said.
While there's plenty of media reports about farmers getting a higher price for corn, stories aren't showing all the increased costs for farmers, Shotliff said.
"In the last three years, my expenses have gone up about 50 percent," he said. "There's so much more invested and at risk. You can't control the weather or the market."
First there's more nitrogen and fertilizer needed for more acres. Then add the rising costs for equipment fuel and LP gas for drying the corn, Shotliff said.
"You never see that. People just see, 'Oh the corn prices are up.'"
The difference between prices at the Chicago Board of Trade and the Evansville market have increased, too. In 2003, the Chicago price was 15 cents higher, now it's about 30 to 45 cents higher, Shotliff said.
"There's concerns about the variables that we can not control," he said. "There's so many risks. It's a lot more stressful."
