Corn Belt Shifting

For many decades, the primary area of the Corn Belt in the U.S. was generally considered to be Iowa, Illinois, Indiana, Ohio, eastern Nebraska, southern Minnesota and Wisconsin. Since the mid 1970s the area known as the Corn Belt in the U.S. has been shifting and expanding. Favorable grain prices in the early 1970s caused that primary area for corn and soybeans to expand to the south and west, with the Southeast U.S. becoming a major soybean producing region. Expanded irrigation in Nebraska greatly increased corn production. About that same time, there was a large increase in corn and soybean acres into central Minnesota and eastern South Dakota. That expansion of corn and soybean acres in Minnesota and the Dakotas has continued since the late 1970s, with the greatest expansion in recent years occurring in the Red River Valley, and adjoining areas of Minnesota and North Dakota.

The March 31 USDA Planting Intentions Report indicated that North Dakota farmers plan to plant 4.15 million acres of soybeans in 2006, an increase of 41 percent over last year, and 1.65 million acres of corn, which is a 17 percent increase over 2005. For 2006, Minnesota corn acres are expected to hold steady at 7.3 million acres, while soybean acreage is expected to increase by 4 percent over last year to 7.2 million acres. Most of the expanded corn and soybean acres in Minnesota and the Dakotas is the result of lower acreages of wheat and other small grains. For 2006, North Dakota wheat acreage is expected to drop to 7.9 million acres, which is a reduction of 1.2 million acres, or over 13 percent, from a year earlier. Minnesota wheat acreage is expected to drop by 200,000 acres, or 11 percent, in 2006. However, even with the shifting and expansion of the Corn Belt in the U.S., Iowa, Illinois, Indiana, Minnesota and Nebraska still produce a vast majority of the corn that is raised in this country.

Northstar Ethanol
Congratulations to the management, staff and board at Northstar Ethanol on completing a very successful first year of operation. The Northstar Ethanol plant, located 2 miles west of Lake Crystal, MN, began processing corn on May 10, 2005. The Northstar Plant was at nameplate capacity, or full production, in only seven days, which is almost unheard of in the ethanol industry. The Northstar Plant has a listed capacity of about 50 million gallons of ethanol annually. The plant uses approximately 18 million bushels of corn each year, and employs over 40 people in various phases of the operation and management of the plant. The Northstar Ethanol plant had a very successful and profitable first year of operation.

Northstar Ethanol utilizes about 50,000 bu. of corn per day, most of which is purchased from a 30 mile radius around the plant. Area farm operators have seen the impact of another local corn market in the region. Northstar Ethanol has been offering very competitive corn prices for future delivery, and the basis between local cash corn prices and Chicago Board of Trade prices on a given day has narrowed by 5-10 cents/bu., compared to the typical corn basis at various times throughout the year. The possibility of other new ethanol plants in the region and the major expansion at Heartland Corn Products at Winthrop, MN should further strengthen local cash corn prices in south central Minnesota.

Editors 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.