Rising prices improve outlook for corn farmers
Kevin Schmidt couldn’t hide the smile in his voice when talking about the price of corn.
“I’m happy. I have a whole better outlook on life,” Schmidt, who farms near La Salle, said with a laugh. The cause of his happiness was the increase in the price of corn, which has jumped to more than $5 a bushel in the past week or more and continues to climb.
In Schmidt’s case, he said he had completed his harvest of 325 acres of the corn for grain crop. All of it, he said, was high-moisture corn that is harvested before it is dry enough to store in bins. Instead, it goes to pits to be used as livestock feed. The advantages of high-moisture corn are an early harvest, a reduction in field losses as the corn dries, storage costs and a better feed values, experts say.
While some of that was harvested before the price jump, Schmidt said he was still able to take advantage of the higher prices on part of what he harvested.
The increase in the price of corn came when the USDA estimated this year’s national crop to be below last year’s both in terms of yield per acre and overall production. Then Wednesday, the EPA approved the use of E15 fuel use, a mixture of 15 percent ethanol made from corn mixed with 85 percent gasoline for newer vehicles, up from the previous 10 percent-90 percent levels.
Some estimates are that the price of corn may top $6 a bushel and could go as high as $6.50.
Mark Sponsler, executive director of Colorado Corn, based in Greeley, said the move by the EPA was good news not only for corn growers, but for the country as well.
“This is clearly a step in the right direction for America. Ethanol is good for our environment, our economy and it is energy efficient,” Sponsler said in a news release. He also said he expects the state’s farmers to exceed the forecasted 144 bushel yield by the time this year’s harvest is complete later this fall.
The USDA has forecast an increase of 220,000 acres of corn to be harvested in Colorado this year, up to 1.21 million acres. That relates to more than 171.3 million bushels, up from about 1.52 million bushels last year. The average yield at 144 bushels to the acre is nine bushels per acre less than a year ago.
The National Corn Growers Association said in a news release that this year’s reduced harvest is still the third largest crop in history and will provide a surplus of 1 billion bushels. Corn use for 2010, according to the association, is projected at 13.5 billion bushels. This year’s expected harvest of 12.7 billion bushels combined with a carryover of 1.7 billion bushels from last year’s crop will meet all demands, the NCGA said.
Norm Dalsted, an agricultural economist at Colorado State University, said this year’s jump in corn prices is reminiscent of what happened in 2008 and that resulted in higher land prices, higher land lease prices and was good for implement dealers, among other factors.
“Obviously, it’s good for corn growers. But, unfortunately, for every gain we see in agriculture there’s one or two losses. The increase in the price of corn means higher costs for cattle feeders and dairy operators, because there’s not many substitutes for corn,” Dalsted said.
In addition, he said, corn is a vital industrial product that is used in plastics and many other industrial areas as well as ethanol.
“The last figures I had was that as much as 30 percent of the corn raised in the nation is used for industrial uses. It’s probably higher than that now,” Dalsted said.
He said he has no idea how high the price might climb this year.
“I wish I had a crystal ball, but I have no idea what it could do,” he said.