Farmers fear ethanol demand could bump up corn prices

By Casey Peacock: PNT Staff Writer

Ethanol industry demands could cause escalating prices for dairy and livestock producers.

Corn production is expected to increase, say analysts, but demand still may not be met, affecting everything from feed prices to prices at the grocery store.

Corn prices are holding steady around the $4 mark, according to the May futures. At one point, the price was up to $4.50 a bushel. Since that time, the market has pulled back, which is common, said Tana Williams, commodities broker for Southwest Commodities in Clovis.

The dairy industry could be greatly affected if the cost of corn continues to rise, according to extension dairy specialist Robert Hagevoort. Rising corn prices also affect the price of cotton and soybeans, which are utilized by dairies for feed, he said.

“One thing leads to another and cost production increases because of everything going up,” Hagevoort said.

Local farmer Brent Corbin said as corn prices climb, so will the price of silage used by the dairies. For this area, he predicts that a few more acres of corn will be planted, but that it won’t be a significant amount, he said. For the long haul, he expects that many of the farmers will continue to grow and harvest silage for the local dairies.

“I really think their preference will be to the dairy,” Corbin said.
The price of silage per $32 a ton.

Last year silage averaged $27 to $30 per ton, with the standard rate was at $28, said Johnny Jimenez, owner of Jimenez Custom Harvesting in Clovis.

New Mexico State University agronomy specialist Mark Marsalis said corn is predominately grown for feed in this region.

He said increased production of corn being used for ethanol versus feed could prove to be a hardship for the beef and dairy industry. As the price of corn rises, producers will be forced to continue paying the high price or find another high energy feed that they can use, he said.

“It’s going to be difficult to feed cattle at this price,” Marsalis said.

Farmers are expected to plant 90.5 million acres of corn, according to the U.S. Department of Agriculture’s annual prospective plantings report released Friday. That would be a 15 percent increase over 2006 and the most corn planted since 1944.

The move to plant corn is in large part due to a rush to produce corn-based ethanol, which is blended with gasoline. There are now 114 ethanol refineries nationwide and another 80 under construction.

The Associated Press contributed to this report.