January 31, 2008

Will Next Years Corn Crop Meet Demand?

An article appeared in the news earlier this month in which an expert from Purdue University expressed his doubts as to whether the 2008 corn crop would enough to meet all demands.

Full Article

While I understand his logic and agree with most of the points that he makes, this prediction is not a given. Let me explain why.

As with many predictions made on agricultural topics it is based at least somewhat on certain things remaining static. In this case he predicts corn acreage will go down from last years amount. And he predicts this based on acreage being shifted back to other crops, such as soybeans and wheat.

From what I have read some of 2007's corn acres will be shifted from corn to other crops in 2008. Many farmers broke out of normal rotations in 2007 to plant more corn acres and will need to get back to a more traditional pattern in 2008.

Add this to the fact that ethanol production is expected to require more corn in 2008 and you can see why he is concerned about the situation.

"This will require about 4.5 billion bushels of corn if these plants are to run at full capacity," Hurt said.

So if you add up the fact that some acreage will be shifted away from corn in 2008 while at the same time demand is going up, it suggests a shortfall. But the one thing that isn't considered is the amount of land that wasn't in production in 2007. Just look at the amount of land planted in principal crops for the last few years.

2007 - 319,990,000 acres
2006 - 315,960,000 acres
2005 - 317,754,000 acres
2004 - 322,380,000 acres
2003 - 325,692,000 acres
2002 - 327,283,000 acres
2001 - 324,928,000 acres
2000 - 328,325,000 acres
1999 - 329,556,000 acres
1998 - 329,323,000 acres
1997 - 332,072,000 acres
1996 - 333,682,000 acres
1995 - 318,289,000 acres
1994 - 323,699,000 acres
1993 - 319,518,000 acres
1992 - 326,453,000 acres
1991 - 325,362,000 acres
1990 - 326,337,000 acres
1989 - 331,152,000 acres

As you can see the acreage planted bounces around quite a bit. But it shows that acreage planted in 2007 was well below that of recent years. Just to get idea how much this difference could make, let's look at the acreage planted in 1996 compared to 2007.

333,682,000 acres - 319,990,000 acres = 13,692,000 acres

Let's see what would happen if all those acres were planted in corn and produced the same yield of 151.1 bushels per acres as in 2007.

13,692,000 acres X 151.1 = 2,068,861,200 bushels

So if just the acreage that hasn't been in production over the last few years was brought back into corn production it would supply about 46% of the estimated corn needed for ethanol production in 2008.

So while he makes some good points in his analysis, he is relying on the amount of land planted to remain static and as we see that doesn't always happen. And also that that land could have a large impact on the overall production.

Source : USDA

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