Corn Commentary

Increasing Productivity to Feed the World

Several speakers at the World Food Prize symposium this week in Des Moines were from the major agricultural chemical companies, including Monsanto, Syngenta and Pioneer.

World Food Prize Paul SchicklerPioneer Hi-Bred International president Paul Schickler was on a panel that focused on the “Promises and Challenges of Next-Generation Science and Technology.” He took the first question to the panel, which was “How optimistic are you that the world can reduce hunger by half by 2015?”

Schickler stated that he was very confident that goal could be reached, simply on the basis of increased food production, using hybrid corn as an example. “If you look back throughout the development of hybrid corn, productivity has improved at about one and a half percent per year,” he said. “As we look to the future, we think we can double that, and that has already started to show up in the last 8-10 years through the use of biotechnology, plant genetics and improved agronomic practices.” That would mean corn yields in the United States could hit 210 bushels an acre in ten years, and what that means is increased sustainability because more food can be produced on less acreage.

Listen to Paul’s answer to that question here:

Roasting Corn Down South

Roasted CornRon is the roasting man at Sunbelt Ag Expo. I caught him roasting some ears of corn early in the morning before his booth was busy, although he says that there are people who like a corny breakfast.

He cooks with propane and says he does about 75 ears at a time. He like the combination of yellow and white sweet corn because it looks good and is very tasty. He says a key to a good ear of roasted corn is to cook it hot and for about a half an hour.

As you’ll hear Ron say in this video, “we dip it in some butter and you’ll grin from ear to ear.”

International Focus on Distillers Grains

Distillers grains are often called the “best kept secret” about the ethanol industry – the one-third of corn that comes back as livestock feed as a result of ethanol production.

DDGs have also become a major value-added export for the United States. Exports of DDGs expected to hit 3 million metric tons valued at an estimated $600 million this marketing year and next year they are projected to reach at least 4 million metric tons at $800 million.

The U.S. Grains Council and USDA’s Foreign Agriculture Service are helping to get the good word about DDGs out by co-sponsoring the International Distillers Grains Conference with approximately 140 major foreign buyers, nutritionists, and feed ingredient importers expected to attend. The meeting will be held October 19-21 at the Indianapolis Marriott Downtown.

Registration for the conference is still open on-line at distillersgrainsconference.com.

Where Would Prices Be Without Ethanol?

Here is an impressive table of stats put together and published last month by Iowa State University economist Robert Wisner.

In an article published by ISU’s Ag Marketing Resource Center, Wisner says, “No one knows precisely what impact the rapid growth in the production of biofuels has had on corn and soybean prices, but the evidence below suggests it has been substantial.”

Corn Price Table 1

Corn Price Table 2

Now, with the recent huge drop in commodity prices, this scenario may not play out quite as well, but it does appear that ethanol has had a pretty big impact on corn prices.

Schafer Says ACRE Decision Coming Soon

Agriculture Secretary Ed Schafer expressed some frustration about implementing the ACRE program included in the 2008 Farm Bill and disappointment with how Congress is handling the issue during a question and answer session at the Association of Equipment Manufacturers AgExecutive forum this week in St. Louis.

AEM Ed Schafer“But we will make this decision here if not the end of this week, the beginning of next week, and get the numbers out so producers know what’s going on when it comes to planting decisions,” Schafer said. “I’m leaning to a program using the ’07-08 numbers that Congress committed to, but we have another issue getting it through the Office of Management and Budget.”

Speaking to members of the press later, Schafer said this has been a very thorny issue with a lot of pressure financially on both sides to put the program in place and trying to find the proper place for the potential expenditure for taxpayers has been difficult. “This program was scored in a certain manner that was supposed to save taxpayers money,” Schafer said. “I think Congress, in their infinite wisdom, looked at commodity crop prices continuing to go up. If we use an ’07-08 baseline number based on current conditions today, the guaranteed price for corn would be $4.88. With corn closing in the low $4 range this week, that would mean the cost of this program would go up dramatically.”

Schafer says the major question is when the baseline date will be. “While the CBO scored this bill for ’07-08, they used a baseline from last April,” Schafer said. He believes that was the intent of Congress, but he says the intent was also “to save us $250 million, not to spend an extra billion.”

Listen to Schafer’s comments on ACRE from both his Q&A and the press availability here:

Ag Execs Hear About Commodity Trends

Commodity trends were on the agenda for a group of agribusiness executives meeting in St. Louis this week as part of the Association of Equipment Manufacturers annual AgExecutive Forum.

The executives heard from commodity organization representatives for corn, soybeans and wheat on where we are headed on the commodity road today – as if anyone can really answer that question with any kind of certainty at the moment!

But, Fred Stemme with the National Corn Growers Association gave it a go for the corn side of the equation, making the point that one thing we can say with some certainty is that yields are increasing and should continue to do so. “If you look at the charts for 15, or 20 or 30 year yield trends, they don’t really tell the story about biotechnology, marker assisted breeding and the fact that we have now mapped and sequenced the corn genome,” Fred says. “If you look at a ten year yield trend, we’re looking at about 180 bushels per acre nation average for corn by 2015.”

“As we look forward, our economists are telling us that we could be looking at a crop of 17 billion bushels,” he says. “We use about three billion gallons to produce ethanol and at the same time still have 14 billion bushels for all the other uses – food, feed, livestock, exports – and that’s four billion bushels more than we actually used in 2002.” While there are short term concerns with the financial situation, Fred told the ag execs that the corn industry is very optimistic about the long term future for agriculture.

There was quite a bit of focus at the forum on ethanol and Fred thought it was great to see these executives from mainly farm equipment companies recognizing how important the biofuels industry is to the future of agriculture.

Listen to an interview with Fred here:

Corn Crop Higher

NASSThe October USDA crop production report gives a slight boost to the corn and soybean forecasts.

Corn production is forecast at 12.2 billion bushels, up 1 percent from last month but 7 percent below 2007. Based on conditions as of October 1, yields are expected to average 154.0 bushels per acre, up 1.7 bushels from September and 2.9 bushels above last year. If realized, this will be the second highest yield on record, behind 2004, and production will be the second largest, behind last year.

According to USDA, yield prospects improved in the central Corn Belt, central Great Plains, and upper Mississippi Valley as September rains brought much needed moisture to the region.

Soybean production is forecast at 2.98 billion bushels, up 2 percent from the September forecast and up 11 percent from last year.

Read the full report here.

Question now is, will these new fundamentals cause commodity futures to drop even lower today?

Iowa Ag Secretary Optimistic Despite Trying Year

The Iowa Secretary of Agriculture says 2008 has been a rough year for farmers in his state.

In an interview with the Associated Press this week, Bill Northey lamented a year of record rainfall, flooding and generally bad weather for farming.

The good news though is that so far frost has held off, which is helping farmers get the harvest finished, Northey says.

The former president of the National Corn Growers Association and fourth-generation farmer from Spirit Lake discussed a number of other issues with the AP, including renewable fuels and exports.

UN Unaware Corn Prices are Falling

On Tuesday, the United Nations Food and Agriculture Organization called for a review of “current policies supporting, subsidizing and mandating biofuel production and use” because demand for biofuels, such as ethanol or biodiesel, was leading to “continued upward pressure” on the price of agricultural commodities.

FAOHowever, commodity prices are falling – and rapidly. Right along with the stock market, corn futures dropped Monday more than 6% to the lowest level in more than 10 months, and the decline continued on Tuesday with corn for December delivery closing at $4.17.

As the old saying goes – the best cure for high prices is high prices – meaning that, basically, what goes up must come down. Corn is getting back down to year ago levels now after hitting around $8 a bushel earlier this year.

However, the new FAO report “The State of Food and Agriculture 2008″ was probably written back when commodity prices were higher, I guess on the assumption that they would just continue to rise.

The FAO report says “The emergence of biofuels as a new and significant source of demand for some agricultural commodities … contributes to higher prices for agricultural commodities in general, and for the resources used to produce them.”

Oddly enough, the report says nothing about the impact of higher biofuel production on oil prices – which are also much lower now then they were earlier this year.

Illinois Corn Growers E85 Challenge

GatewayThe Illinois Corn Growers Association is teaming up with Gateway International Raceway and Mustang 5.0 Magazine to showcase E85 as a high performance racing fuel this month in Madison, Illinois.

ICGAThe E85 Challenge will showcase street legal, production line built and custom made performance cars running on America’s fuel. “The Challenge will show how flexible E85 is in today’s cars and shine a spotlight on how ethanol, known primarily for its environmental and economic contributions, is also a high octane product,” said ICGA President Art Bunting.

The E85 Challenge is scheduled for 2-4 pm on October 15 and admission is free. After 5 p.m. gate admission is $10. Details can be found here on the Gateway International Raceway website.



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