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Bright days beckon for corn, says agribusiness

Agriculture.com Staff 10/18/2006 @ 3:42pm

Like you, Pat Steiner, brand manager of mesotrione products for Syngenta Crop Production, had heard projections of a booming corn market for several years.

However, he wondered if it would ever occur. Typical was a February 2005 USDA report that showed fairly constant corn use via exports; ethanol; food, seed and industrial use; and feed and residual use.

"I thought after looking at it, 'there's not a lot going on here,'" he told those attending a mid-October media summit sponsored by Syngenta.

That changed after a September 2006 Des Moines Register article that quoted Keith Collins, USDA chief economist, predicting U.S. farmers will need to plant 90 million corn acres by 2010, over 11 million more acres than were planted this year.

All this has coincided with a roaring corn bull market this fall. Ethanol has been a key driver. Steiner referred to a chart by The ProExporter Network (PRX), Olathe, Kansas, that shows ethanol consumption more than doubling from 2006 to 2009 and beyond.

"The market is changing very, very quickly," says Steiner.

All this echoes Collins' prediction for more corn acres to meet demand.

"When you think about the ethanol industry two to three years ago, some said this will be a major market and have a major impact," says Steiner. "I thought major might mean 82, 83, or 85 million acres of corn. I don't think anyone in the industry anticipated having an unprecedented growth in corn acres coming."

All this means a boom in corn prices. Steiner pointed to PRX chart showing corn prices bumping $5 per bushel by the start of next decade.

"They aren't talking about the peak price, they're talking about the weighted price for entire year," says Steiner.

Like you, Pat Steiner, brand manager of mesotrione products for Syngenta Crop Production, had heard projections of a booming corn market for several years.

Accompanying this prediction of heady corn consumption and prices is an agribusiness and farmer strategy shift from cost containment to profit maximization.

The increase in biofuels is akin to a modern-day gold rush, says Travis Dickinson, head of marketing for Syngenta Crop Protection.

The Conservation Reserve Program is a possibility. However, a good share of this is marginal ground, says Steiner. Wheat acres are another possibility, although recent skyrocketing wheat prices dim this possibility.

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