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A corn futures rally is needed

Agriculture.com Staff 08/17/2007 @ 12:47pm

December 2008 corn futures have been hovering near $4 for the past few months.

However, when computing current input costs, $4 futures are not high enough to entice corn producers to maintain the high level of corn acreage they have planted this past year, or for that matter, plant additional acres for next year. Yet, it may be critical to maintain or expand corn acreage in order to meet growing demand. How will this happen?

Quite simply, corn futures are going to have to rally, most likely between $4.25 and $4.50 December 2008, to encourage farmers to consider planting as much or more corn ground as they have in 2007. With bean prices trading between $8.50 and $9 new crop, and wheat prices at multi-year high levels, a battle for acreage will be brewing in the months ahead. Most farmers we have talked to recently have suggested that they would prefer to go back more to a rotational crop plan.

In addition, with the increased acreage this year comes increased work this fall, and the jury is still out as to how much it will actually cost farmers to harvest a large crop. In the end, price will determine which direction the farmers will move, but currently, the relationship between soybeans, wheat, and corn favor either wheat and beans or a combination of wheat and double crop beans away from corn acreage. Unless corn provides more of an economic incentive, look for acreage to be reduced next year unless corn prices rally significantly.

If you have any questions or comments, please contact Top Farmer at 1-800-TOP-FARM, ext. 129.

December 2008 corn futures have been hovering near $4 for the past few months.

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