Corn Supplies And Acreage For 2007

The rapid expansion of ethanol production in the U.S., and the potential for shortages of an adequate corn supply in the future, have been getting a lot of attention in Congress, among farm organizations, and in the popular press in recent weeks. The latest USDA Crop Supply and Demand Report, released on Jan. 12, showed that total corn stocks in the U.S. on Dec. 1, 2006, were projected at 8.93 billion bushels, which is down 9% from Dec. 1, 2005. The projected corn ending stocks for 2006-07 are estimated at 752 million bushels, which is down significantly from the corn carry-over of 2.4 billion bushels for 2005-06 or the 2.1 billion bushels for 2004-05, and is even lower than the 958 million bushel corn carryover for 2003-04. To put it another way, USDA is projecting that the U.S. will utilize almost 11.8 billion bushels of corn in the 2006-07 marketing period for livestock feed, ethanol, food products, seed, exports, etc. This means that a projected 752 million bushel carryover represents less than one-month supply of U.S. corn reserves, as we head into the 2007 growing season.

According to the most recent USDA report, corn used for ethanol production in the U.S. has risen from 1.3 billion bushels in 2004-05, to 1.6 billion bushels in 2005-06, to an estimated 2.1 billion bushels in 2006-07. Based on new ethanol plants and expansions being planned, the corn use for ethanol production is estimated to reach 3.1 billion bushels by 2007-08, and even higher in the years to follow. However, the greatest use for corn in the U.S. remains for livestock feed, projected to be close to 6 billion bushels for 2006-07. Corn exports have also remained strong, projected to be at about 2.2 billion bushels for 2006-07. Most experts agree that the U.S. will need a larger annual production of corn in the coming years to meet expected future corn usage needs.

Consider Iowa, which grows more corn annually than all countries in the world except the U.S. and China. Iowa has raised over 2 billion bushels of corn annually for several years. It also has the fastest growing ethanol production industry in the U.S., and of course is one of the top livestock producing states in the country. According to Iowa officials, there are currently 63 ethanol plants in operation or in some phase of construction in Iowa, including a new 275 million gallon ADM ethanol plant at Cedar Rapids. In addition, there are another 11 ethanol plants in other states that draw corn from Iowa. If all the proposed ethanol plants in Iowa become reality in the next 2-3 years, the state’s corn farmers would have to average 290 bu./acre at 2006 corn acreage levels, or increase corn acreage by 75% at 2006 corn yields, in order to meet the added needs for corn, assuming livestock feed usage and export demand stays the same. Just the new ethanol plant at Cedar Rapids will require an additional 600,000 corn acres at current average yields to supply enough corn for the plant.

Most grain marketing analysts estimate that 2007 corn acreage will need to increase by 6-8% for 2007, with average trendline yields, in order to supply the added corn for ethanol production, and to maintain U.S. corn carry-over levels.Most observers feel that we will see an increase in 2007 corn acreage of at least that amount, if not more, with further increases in corn acreage expected in the 2008 and 2009 growing seasons.


Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at kent.thiesse@minnstarbank.com.