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The Associated Press – Friday – January 12, 2007 – 15:37

Crop report: Corn supplies dwindle, prices rise

By LIBBY QUAID
AP Food and Farm Writer

WASHINGTON (AP) _ Ethanol plants and foreign buyers are gobbling the nation's corn supplies, pushing prices as high as $3.40 a bushel, the Agriculture Department said Friday.

Farmers haven't seen prices this high for more than a decade – a range of $3 to $3.40 a bushel, according to the new crop forecast.

That's up 10 cents from December. Robust prices have made corn more expensive to feed livestock.

"It makes a lot of difference," said Doug Wewe, who raises cattle in Pretty Prairie, Kan., west of Wichita. "We've got to keep them gaining weight. In the cold weather we've had, they don't gain weight, and they eat more."

Wewe feeds his cattle around 4,800 pounds of corn, about 85 bushels, each day.

High prices have forced some producers to switch to hay or other feed, but the dropoff in feed use was more than offset for corn farmers by growing demand from foreign markets, according to the crop report.

In Wheatland, Wyo., Randy Stevenson is feeding his cattle less corn and more distiller's grains, the byproduct of making corn-based ethanol fuel. Recent drought and high feed prices are   squeezing cattle producers.

"It's very painful," Stevenson said.

Strong demand is eating into corn supplies, which are expected to drop from nearly 2 billion bushels to 752 million bushels.

That doesn't mean people will have less corn to eat; corn for livestock and fuel is different from sweet corn, the source of fresh corn on the cob and canned or frozen corn.

Eventually, sustained high corn prices would probably lead to higher grocery bills, but so far there has been no boost in what consumers pay for beef or pork.

Overall, the 2006 corn crop came in at 10.5 billion bushels, slightly under last month's forecast of 10.7 billion bushels. Anticipated yields were 2.1 bushels less per acre, and the area planted
and harvested was slightly smaller than expected. The amount of corn used for ethanol, forecast at 2.15 billion bushels, was unchanged from last month. Exports are forecast to claim 2.25 billion bushels of corn from last year's crop, up from last month's forecast of 2.2 billion bushels.

Corn prices on the futures market rose Friday by 20 cents a bushel, the maximum allowed on the Chicago Board of Trade, to $3.96 ½ a bushel.

Also in the crop report:

* The just-harvested soybean crop was estimated at 3.18 billion bushels, down less than 1 percent from last month's forecast and up from the 3.06 billion bushel crop in 2005. The price estimate tightened from $5.70 to $6.50 last month to $5.75 to $6.45.

* Analysts predicted a big increase in wheat production this year, after several years of decline. Analysts said winter wheat plantings rose 9 percent to 44.1 million acres; the price forecast was
unchanged from last month at $4.15 to $4.45 a bushel.

* Price forecasts rose for hogs and broiler chickens and were unchanged for cattle, turkeys and eggs.
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On the Net:
Crop reports:
http://www.usda.gov/oce/commodity/wasde/index.htm
http://www.nass.usda.gov

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