07/14/06 Higher Corn Prices

Ethanol demand and higher corn prices will spur producers to plant more corn and fewer soybean acres than expected last month. That's according to the latest USDA forecast. USDA is now projecting that growers will harvest just over 72-million corn acres this season. According to World Ag Outlook Board Chair Gerald Bange - that's based on plantings higher than intended earlier. BANGE: Well the intended planting area was 1.3 or about 1.7 percent lower than it turned out to be. With the planted areas it turned out to be according to the NASS number 79.4. That's in millions of acres. And - as for harvested acres - Bange explains. BANGE: According to the numbers from the National Ag Statistics Service, they anticipate a harvested area of 72.1 million acres which is up 1.3 million acres from the prospective plantings report. Bange says that boosted the production forecast - while increased usage and unchanged stocks kept prices at 2.45 a bushel. But the increased corn acres - according to Bange - mean soybean acres dropped. BANGE: We saw an increase in the corn area, up 1.3 and a decrease in the soybean area, down 1.8. We are now looking at a soybean production of just a little bit over 3 billion bushels, 3.01 billion bushels to be exact, that's down about 70 million bushels from our previous forecast. Bange credits the change to higher corn prices - rapid plantings and the success of ethanol. BANGE: I think with the prospects for that plus the fact that we are looking at a price now of about $2.45 which is up fairly sharply from the $1.98 per bushel we are seeing for the 2005-6 year, gave farmers some inspiration perhaps to keep those tractors running and keep planting corn. Bange points out that corn use for ethanol is forecast at 2.15-billion bushels - identical to the corn export forecast. That's today's Line On Agriculture. I'm Greg Martin on the Northwest Ag Information Network.