Looking at the huge increase for 2007-corn acres projected in USDA's March 30 Planting Intentions Report, the key question is: Will there be much change between now and what farmers actually end up planting this spring?
That was one of several important questions addressed in a telephone press conference by the Iowa Corn Growers Association on Friday. The phone conference was held following USDA's release of the report earlier in the day.
"I'm not fearful of running out of corn," says Tim Recker, an Arlington, Iowa farmer who is the incoming president of the Iowa Corn Growers Association. "We're planting more corn because the market is telling us it needs corn. We have a huge demand-driven market for the first time in many years. It is telling us to plant more corn."
Will farmers plant enough corn?
That has been a constantly asked question as more and more corn is being used to make ethanol, as livestock feeding and exports have continued strong and as the price of corn has doubled in the last six months.
Now that the USDA report has been released and it shows a potential big increase in corn acres, will Recker change his mind regarding his planting plans on his own farm for 2007? It will depend on the weather in April, he says.
"If we have an extended period of rain during corn planting time I may switch back to soybeans on some of my acreage," says Recker. "But I don't plan on doing that. I'm hoping for good corn planting weather. It looks like there is going to be considerably more corn planted in 2007 than in 2006 nationwide."
Recker says he plans to plant 15% more corn than he planted last year on his northeast Iowa farm. This year he plans to plant 1,000 of his 1,500 acres to corn. The reason is simple. He figures he could earn $30 to $50 more per acre, after expenses, than he could with soybeans this year.
Livestock feeders, ethanol plants
Corn prices declined after the USDA report was released Friday March 30. "We may see some farmers reevaluate whether or not they're going to plant as much corn as they intended earlier," says Recker. "You have to look at price prospects as well as production costs. Corn costs more to grow corn compared to beans."
With the USDA report showing a large increase in intended corn plantings, it was pretty much a given that the markets would have to adjust. "Corn farmers are following the market," says Julius Schaaf. "Prices for the last six months have been good for corn so it was predictable that farmers want to plant more corn. We knew the report would show an increase in intended corn acreage."
On his own farm, is Schaaf still planning to plant more corn than last year? "Before the USDA report was released last Friday, I wasn't planning a huge shift to corn. I was planning to stay close to my normal 50-50 corn-bean rotation. I was planning on maybe a 10% shift to corn, just to enter the learning curve for growing corn following corn. In southwest Iowa we've been able to raise very good bean crops in the past. I haven't grown corn on corn in maybe 20 years."
"What I end up doing on my farm this year depends on what happens with the weather between now and the end of April. We may follow through with our plan to plant 10% more corn, or we may go back to our original 50-50 corn bean rotation," he says. "But the corn market is calling for more corn and corn growers are stepping up and they will plant more corn, so I think it's a win for everyone."
Iowa Soybean Association responds
USDA released its Planting Intentions report on March 30 and as expected, soybean acres are down. The survey predicts for the state of Iowa that the 2007 planting season will see 950,000 fewer soybean acres, which is slightly less than a 10% drop compared to 2006's Iowa soybean acreage. Nationwide, soybean acres are predicted to be down 11% this year compared to last year.
In a press release issued March 30, Kirk Leeds, chief executive of the Iowa Soybean Association says, "ISA is not surprised by the numbers released March 30 by the USDA. Farmers will and should make decisions based on market signals and right now the market is asking for more corn."
"At the same time, soybeans have continued to see strong growth in global demand and we must aggressively seek to participate in this global growth with domestic farm policies and international trade agreements that are fair and equitable to soybeans," says Leeds.
More price unpredictability ahead
Leeds points out that soybeans like corn, are also an energy crop and bean prices will rise as soybeans compete with corn for acreage.
With corn prices increasingly impacted by the price of energy, farmers and the entire agriculture industry are moving into a period of growing unpredictability. Farmers are very aware that this volatility can produce opportunities for economic gain as well as opportunities for dramatic downturns. The new farm bill must recognize and respect these powerful market fluctuations, he says.
Leeds warns that it is in the best interest of Iowa's farmers to have at least two crops competing for acres. "With the expected growth in cellulose ethanol, the current market signals for more corn acres could be relatively short term, especially when combined with the recent boom of the biodiesel industry and the global demand for vegetable oil and high quality protein sources," he says.
Farmers respond to opportunities
Senator Tom Harkin, D-Iowa, chairman of the Senate Agriculture Committee, also weighed in on the USDA survey which projects that 90.5 million acres of corn may be planted this spring in the United States.
"The March 30 USDA report demonstrates that farmers will respond to market signals arising from the increased demand for corn and ethanol," says Harkin. "The new data further confirms the potential for biofuels production and use to boost farm income, economic growth and jobs in rural communities while enhancing America's energy security."
"Expansion in ethanol and biodiesel production can be attributed at least in part to the Energy Act of 2005 and its Renewable Fuels Standard of 7.5 billion gallons of renewable fuels by 2012, which we will surpass this year or next year, well ahead of schedule," says Harkin.
If the planting intention estimate of 90.5 million acres of corn is realized, it would represent the highest level of corn acres nationally since 1944. "This figure," adds Harkin, "should help to address concerns about corn supplies, yet it also reminds us that intensified crop production demands greater efforts to conserve our resources – and that higher production in response to stronger prices can also lead to oversupply and lower prices."