Ag Line: Corn rises to 10-year high
By Wade Parker

As I write this article on Friday, January 12, corn closed at a 10-year high ($3.96 March), sparking rallies for soybeans ($7.16 March) and wheat ($4.79 March). The main catalyst for driving record demand for corn is the fact that ethanol will be using up more of the crop.

What makes this rally so unique is the fact that the 2006 harvest was the third largest ever in the U.S. Corn prices have surged more than 86 percent this year. This rally will encourage farmers to plant more corn at the expense of wheat, soybeans, cotton, and peanuts; therefore, boosting the overall prices of these commodities.

Global consumption in the year that began October 1, 2006 will rise to a record 726 million tons, exceeding production for the sixth year in seven, according to the USDA. On the supply side, global inventories will drop to 86.4 million tons, down 55 percent since 2000.

What is the end result of the above dialogue, high prices! This scenario will get prices to a high enough level to start rationing demand and get farmers to plant more. The record demand can be attributed to grain-based fuels and livestock feed. Along those same lines, record demand for ethanol may increase corn usage by more than 1 billion bushels next year, or 47 percent.

These high prices lead to higher cost of production for livestock and dairy operations. Farmers of these operations must pay higher prices for feed grain products.

The corn, wheat, and soybean acreage in Jenkins County will be considerably higher. Farmers planting corn will get much needed rotational relief and will enjoy a higher net-profit per acre. However, we must not forget the many dollars farmers have invested in cotton pickers, boll buggies, peanut combines, diggers, and many more peanut/cotton investments. It will be interesting to see how many new acres will be shifted to the grain market. We will just have to wait and see!