By Brad Haire
University of Georgia
"If you're growing corn, you're growing a product that has a home that doesn't have to depend on exports or anything else ... which is a big, big bonus," Lewis Campbell, a corn marketer with South Carolina-based Palmetto Grain Brokerage, told participants at the 2007 Corn Short Course and Georgia Corn Growers Association meeting.
Corn prices have jumped by almost $2 a bushel from last year to between $3.75 and $4 a bushel today. (A bushel is about 56 pounds.) Prices haven't been this high since 1996, when there was a decrease in supply due to fewer planted acres and low yields in the United States.
World corn supplies have decreased in recent years from about 181 million metric tons to 93 million, he said. But the surge in prices this year can be attributed largely to the increase in demand for corn to fuel the expanding U.S. ethanol industry, he said.
A bushel of corn can yield almost 3 gallons of ethanol.
Currently, 111 ethanol refineries in the United States produce about 5 billion gallons annually. Production is expected to double in the next two years, according to the Renewable Energy Association Web page.
To meet the new demand, U.S. corn growers will need to grow an additional 10 million acres this year. Last year, farmers harvested about 71 million acres for grain.
Prices should stay high. "But volatility will be the name of the game," Campbell said.
Increased trading by mutual funds and investors in commodities futures could make the market rocky through to harvest time. In recent years, corn prices would fluctuate little from week to week.
"Now, it moves 20 cents in a day," Campbell said. "It's hard to take your emotions out of it, but it's going to be like that all summer long."
Pencil to paper, corn right now looks as good or better economically than other traditional Georgia crops like cotton and peanuts, said Nathan Smith, a University of Georgia Cooperative Extension agricultural economist. This is not usually the case.
"In Georgia, corn is not often the crop farmers plant to pay the bills," he said in an interview after the meeting. "But this year, it should take care of a few."
It's too early to say by how much, but farmers will certainly plant more corn in Georgia this year, he said. Georgia farmers harvested about 225,000 acres last year for grain. They'll likely increase that to 300,000 or more this year, the highest since the late 1990s.
Georgia is a corn-deficit state. Georgia farmers produce 30 million bushels annually, about a quarter of what is needed to feed the state's livestock and large poultry industry each year.