Higher corn prices easing effect of drought

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By The Associated Press

GRAND ISLAND — Stronger prices are making up much of the drought difference in the Nebraska corn harvest this year, experts say.

“It’s OK to have a 10 percent reduction in yields if your price is 80 percent higher than a year ago,” said Todd Gerdes, grain marketing specialist for the Aurora Co-op in Aurora.

Nebraska’s corn crop forecast stands at 1.23 billion bushels — 3 percent under last year’s total, says the U.S. Department of Agriculture’s National Agricultural Statistics Service.

The USDA’s current state yield forecast is for 159 bushels an acre — seven less than the record of 166 bushels set in 2004.

This year’s harvest receipts are down about 10 percent at the co-op, Gerdes said, a result of the higher prices and lower yields.

Irrigated corn has been averaging about 190 bushels an acre, he said. “(W)e have seen yields as high as 240 bushels per acre,” he said, “but not as many of those as a year ago.”

It was dry and hot during much of the early growing season, he said, and “even though we had good rains in August, the damage was already done.”

Another reason for the lower receipts was that many farmers sold off the grain in their own bins to make room for the new crop that might bring a higher price in the future.

The cash corn price Friday at Gerdes’ elevator in Aurora was $3.33 per bushel. At Lincoln-area elevators, the price was $3.10.

Last year, cash corn prices averaged $1.85 per bushel statewide.

Gerdes said higher demand could lead to prices breaking $3.50 for July sale.

Higher prices and demand will probably lead to planting increases next year, said Chris Hurt, a Purdue University agricultural economist.

The demand for corn-based ethanol and the high export demand could lead to the largest U.S. corn acreage since 1946, Hurt said.

Keith Collins, chief economist for the USDA, said more than half the nation’s corn surplus is expected to evaporate.

“We will not have the stocks to draw down next year like we have this year,” Collins said. “As a result of that, we’re going to need substantially more acreage into corn. And that’s what the market is signaling.”

Hurt said about 2.1 billion bushels of the 2006 corn crop will go into ethanol production at the 106 ethanol plants across the country, including 12 on line in Nebraska.

That could grow to 3.5 billion bushels by the end of 2007 to feed 53 new or expanded plants across the country, including nine in Nebraska.

The most corn ever produced in the United States was 11.8 billion bushels in 2004.

The current production forecast at 10.75 billion bushels, up from 10.9 billion bushels last month and more than 11 billion bushels last year.