Soaring prices for corn as the ethanol sector expands will prompt US farmers to squeeze as many bushels as possible from every acre next year, and that premium on yield could boost on-farm storage needs, a grain company official said on Wednesday.
"Because of this pull from biofuels, we have demand for corn and soybeans that is creating a high-price environment and placing a greater premium on yield per acre than we have ever seen in the past," Doug Christie, an assistant vice president with Cargill, said at a seed industry meeting.
US farmers are expected to plant more corn acres in 2007, with analysts predicting an increase of 5 to 10 percent over the previous year. Corn futures on the Chicago Board of Trade reached 10-year highs as recently as last week, creating a powerful incentive to plant corn.
Some of the increase will come at the expense of soybeans. Because corn produces more than three times as many bushels per acre as soybeans, storage will be tight. "When people are adding storage today, they are looking to add volume, low-cost-type storage - not specialised, smaller bins that might allow for better segregation at a farm level or at an initial gathering level for specialised crops," Christie said.
US farmers produced 10.7 billion bushels of corn in 2006 with an average yield of 151.2 bushels per acre, and 3.2 billion bushels of soybeans with an average yield of 43.0 bpa. As producers focus on volume, specialty types of corn and soybeans that require segregated handling could become less popular, Christie said.