Call it a corn rush: Experts predict spike in crop's planting as prices rise
Corn may have North Dakota producers seeing green this spring, as a shortfall in acres nationally last year could entice farmers to boost their planting of it this year, many ag experts predict.
According to the U.S. Department of Agriculture's monthly national production and usage report and future predictions released Feb. 8, more than 12 billion bushels of corn were used last year, while only 10.8 billion bushels were produced.
"There's about a 1.8 billion bushel discrepancy, so someone has to quit using 1.8 billion bushels," Frayne Olson, North Dakota State University crops economist told producers at Tuesday's Taylor Farm Institute. "So, who's going to use less corn? The ethanol industry? Exports? The livestock sector? The answer is everybody."
Olson said supplies are tight, so prices have to be rationed high to get people to fundamentally change how they use corn.
The increase in corn prices also make the crop more desirable for producers to plant this year, said Tom Lilja, executive director of the North Dakota Corn Council.
"It's really been exciting to be a part of this growth that's happened in North Dakota," he said. "I worked for a seed company through the mid- to late-90s, primarily in southeastern North Dakota, selling a lot of corn seed. There was excitement with a new corn sweetener plant down there. From 2004 to 2007, there was a major industry expansion in ethanol and ethanol plants in the Midwest."
In a survey of corn council members, Lilja said more producers indicated that they planned to reduce their corn acres this year.
"It made sense because we had a huge increase in corn producers last year, but I still have a hunch that we will be up this year (in the number of corn producers)," he said.
Profits were shaping up nicely for corn producers in 2012 because they had the potential last year to contract corn in Minot for harvest delivery for about $4.25 per bushel, Olson said.
"You didn't have to go very far this fall and cash corn was above $8 (per bushel)," he said. "If I do the math on this, and I have actually gone back and done this, if we have the worst possible thing happen for corn, price-wise, I can get a 3 in front of corn, a $3.80 or $3.90 (per bushel).
"On the other hand, I could get back to $8 (per bushel) pretty darn fast. I'm not saying that's going to happen, but I could see a scenario where we could get there."
High priced corn is likely to be followed by an increase in the acres of corn that are grown in North Dakota.
"Everybody and their brother is thinking about raising corn now because $8 corn got everybody's attention," Olson said.
Woody Barth, president of the North Dakota Farmers Union, also expects corn to be a popular crop in North Dakota this year, especially in the north and northwestern areas of the state.
"Potentially, corn could be a big crop in the state in 2013, but it will need to be seeded on a timely basis and it will take more moisture," he said.
The average yearly rainfall for Dickinson is about 16 inches, said Roger Ashley, Dickinson Research Extension Center area extension specialist.
But he said the most important time for Dickinson-area corn growers to have moisture in mid-July into August, commonly dry time in southwest North Dakota.
"That is an important time in corn production and the need for the right amount of rain during that time period is crucial," Ashley said.
He said the wettest month in southwest North Dakota is normally June, compared the driest month is likely to be February.
"Do I expect a lot of snowfall now? No," Ashley said. "But I would rather see us get some rainfall around April because the ground will be better able to take it in and that would be better for the crops."
Precipitation will be key.
"It won't matter how much fertilizer farmers put on their fields or how much they cultivate if they don't have the rainfall they need," Ashley said.