Weather, need for large crops make corn market volatile
Posted: Monday, May 14, 2007
GENEVA, Iowa (AP) -- The spring planting season has been both exciting and nerve-racking for Iowa farmers like Don Wohlford, thanks to higher prices for corn and soybeans.
Last week's persistent rains put Wohlford behind schedule, as he and his sons have only planted 700 of the 1,100 acres of corn that they intended to put in the ground. And now that it's mid-May, every day they have to wait could mean fewer yields.
The Wohlfords have plenty of reason to worry about planting delays, because corn prices have jumped to levels not seen in more than ten years. Skyrocketing demand for corn to make ethanol has jacked up corn prices and caused farmers to say they plan to plant their most corn acres since 1944.
Iowa Secretary of Agriculture Bill Northey says that the stakes for this year's corn crop are enormous. He said that corn markets are more fickle than they've been in a long time because of the uncertainty over this spring's weather and the need for a large crop.
"It's very, very important that we have a good crop this year," Northey said. "We'll be tight on supplies going into harvest with all the new demand for corn from ethanol plants coming on line."
The corn market swings in tune with a petroleum market agitated by global politics. The state's emergence as an energy producer is contributing to the anxiety, said Iowa State University Extension economist Mike Duffy.
"We're in a whole new world," Duffy said. "Corn, and therefore land prices, are now tied to the price of a barrel of oil."
Farmers should be relying a lot less on government payments in 2007 than they have in recent years, farm economists say. Iowa's net farm income was $3.4 billion in 2005, the latest year for which an estimate is available. Because the price of corn was so much lower that year, government subsidies accounted for nearly $2.3 billion in Iowa farmers' income.
This year, U.S. farmers are expected to receive $12.4 billion in subsidies, about half what they got as recently as 2005. The cost of buying and renting farmland, along with farming tools, is also is higher this year.
Ray Gaesser, president of the Iowa Soybean Association, said farmers he has talked to enjoy the excitement caused by higher commodity prices, but there's a little voice in the back of their heads telling them the bull market might not last.
"I'd say farmers like what's going on, but they also want to know when the other shoe is going to drop," Gaesser said.
Last week's persistent rains put Wohlford behind schedule, as he and his sons have only planted 700 of the 1,100 acres of corn that they intended to put in the ground. And now that it's mid-May, every day they have to wait could mean fewer yields.
The Wohlfords have plenty of reason to worry about planting delays, because corn prices have jumped to levels not seen in more than ten years. Skyrocketing demand for corn to make ethanol has jacked up corn prices and caused farmers to say they plan to plant their most corn acres since 1944.
Iowa Secretary of Agriculture Bill Northey says that the stakes for this year's corn crop are enormous. He said that corn markets are more fickle than they've been in a long time because of the uncertainty over this spring's weather and the need for a large crop.
"It's very, very important that we have a good crop this year," Northey said. "We'll be tight on supplies going into harvest with all the new demand for corn from ethanol plants coming on line."
The corn market swings in tune with a petroleum market agitated by global politics. The state's emergence as an energy producer is contributing to the anxiety, said Iowa State University Extension economist Mike Duffy.
"We're in a whole new world," Duffy said. "Corn, and therefore land prices, are now tied to the price of a barrel of oil."
Farmers should be relying a lot less on government payments in 2007 than they have in recent years, farm economists say. Iowa's net farm income was $3.4 billion in 2005, the latest year for which an estimate is available. Because the price of corn was so much lower that year, government subsidies accounted for nearly $2.3 billion in Iowa farmers' income.
This year, U.S. farmers are expected to receive $12.4 billion in subsidies, about half what they got as recently as 2005. The cost of buying and renting farmland, along with farming tools, is also is higher this year.
Ray Gaesser, president of the Iowa Soybean Association, said farmers he has talked to enjoy the excitement caused by higher commodity prices, but there's a little voice in the back of their heads telling them the bull market might not last.
"I'd say farmers like what's going on, but they also want to know when the other shoe is going to drop," Gaesser said.
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