Corn is battling soybeans for more acres on farms in Iowa and throughout the Corn Belt, according to the Des Moines Register. Early indications are that corn is losing the fight.
A sudden tightening of corn supplies since late summer boosted prices by 75 percent to $6.25 per bushel by the end of 2010. Some traders say that if farmers don't increase their corn acres this spring, prices this year might threaten the record $7.99 per bushel reached in mid-2008.
Scott Jorgensen, 46, who farms 3,500 acres near Adair, puts the corn vs. soybeans issue succinctly. "You don't switch acres between corn and soybeans based just on short-term prices," he said.
"Soybeans are a lot cheaper to plant, and soybeans are bringing more than $13 per bushel (up from $9 per bushel last June). At those prices, a lot of farmers will say to themselves, 'If everybody else is supposed to plant more corn, then soybeans will still be a good market and maybe I'll stick with them.' "
Iowa is at the center of the battle for acres. What appeared to be a comfortable surplus of 1.7 billion bushels of corn in bins ready for immediate delivery in late summer shrank to less than 1 billion bushels by the end of the year, thanks to a surge in exports and, most important, stronger ethanol demand.
Traders say Iowa needs another 500,000 acres of corn, and the entire nation needs another 5 million acres, above 2010 planting levels to avoid price-spiking rationing among end users who include ethanol plants, livestock feeders, corn sweeteners and exporters.
But a forecast just before Christmas by Informa Economics would seem to bear out the observations of Jorgensen.
Informa pegged the 2011 spring corn planting nationwide at 90.8 million acres nationally, well short of the 94.5 million acres that the corn trade thinks will be needed for adequate supplies. The Informa report put some fresh legs in the corn rally, pushing prices for March delivery from $5.40 in early December to $6.25 right after the Christmas holiday.
Source: Des Moines Register