Corn planting to get boost from ethanol demand

Demand is expected to increase corn planting by 15 percent.
DES MOINES, Iowa (AP) -- An ethanol-fueled boom in prices will prompt American farmers to plant the most corn since the year the Allies invaded Normandy, but surging demand could mean consumers still may pay more for everything from chicken to cough syrup.
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.
Mother Nature will play a large part in the actual acreage planted. Muddy fields are already slowing plantings in some states.
"We're awfully wet out here," said John Scott, a grain farmer in west central Iowa. "Normally by this time of year we're doing quite a bit of field work. There just isn't a wheel turning out here. Illinois is in the same boat."
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 an additional 80 under construction.
Reason for demand
The corn rush was sparked by President Bush's initiative to support flexible-fuel vehicles, which are capable of using gasoline and ethanol blends, and his administration's plan to cut gas consumption by 20 percent in 10 years.
Corn prices were already rising when Bush announced the initiative in Washington on Jan. 23 and there has been growing concern that the corn rush could hurt the poor in less-developed nations such as Mexico, where the crop is a staple used in tortillas.
On Thursday, Cuban leader Fidel Castro wrote in an editorial for the Communist Party daily newspaper that Bush's ethanol plan could deplete corn and other food stocks in developing nations, putting the lives of 3 billion people at risk worldwide.
Corn is a key ingredient in many foods, from corn syrup found in candies and cough syrup to feed used in meat production.
Chicken producers welcomed the planting report, hoping that an increased corn supply would reduce feed costs that have led to a 40 percent rise in chicken prices. But they noted that the bigger corn harvest would come at the expense of soybean acres, expected to drop by 11 percent.
"This is definitely a mixed report," Bill Roenigk, senior vice president and chief economist at the National Chicken Council, said in a statement.
Feed prices
Livestock and dairy producers also were optimistic that increased corn production could lead to a decline in feed prices. That presumption showed up in the stock prices for chicken producers Friday. The shares of Pilgrim's Pride Corp., Tyson Foods Inc. and Sanderson Farms Inc. all rose after the news.
A bushel of corn for May delivery was trading at 3.74 a bushel Friday on the Chicago Board of Trade, down 20 cents from Thursday.
Agriculture industry analyst David Driscoll, of Citigroup Research, said in a report to investors Friday that he expects the increased corn acres to cause the price of corn to fall to about 3 a bushel by December.
Corn had been stuck at around 2 a bushel for years before the ethanol boom lifted prices.