The great acreage race of 2007 is on


As the roaring combine sawed through 30 feet of soybeans at a fast-walk pace last October, a farming friend, through the convenience of his cell phone, sold 160 acres of still-standing corn for a couple or three nickels over $3 per bushel upon harvest.
His reasons, he explained as he kept slicing through the beans, were all solid, sensible and profitable.
First, the corn was 15 miles from his farm; a long way for him to conveniently truck home, store, then haul again later.
Second, the elevator nearest the distant farm wanted 15 cents or so per bushel for storage through Jan. 1, a steep tariff that might be hard to recoup given that day’s lovely cash bid.
And finally, he couldn’t – and neither could I – recall a year when corn was worth better than $3 directly from the field in mid-October.
Really happy. “If that’s the worst sale I make all year, I’ll be happy,” he noted. “Really, really happy.”
As of 10 p.m., Friday, Jan. 12 – the hour our families parted after an evening out and the day corn futures opened, remained and closed locked up the 20 cents per bushel limit – my friend was still really, really happy.
I mean really, really happy.
He’s not alone. The 2006/2007 grain market is in the middle of a perfect storm and every piece of new information – government reports, ethanol industry data, wild-eyed country rumors – seems to be feeding its updraft.
All came together the week of Jan. 8 with explosive force to push corn futures into thin air and drag wheat and soybeans along.
Report. The big news was the U.S. Department of Agriculture’s Jan. 12 Crop Production Report.
Its final 2006 numbers pegged corn production at 10.5 billion bushels, down another 210 million bushels from late 2006. The crop continues to get smaller as demand continues to get bigger.
The smaller-than-thought production tightened carryover stocks – those remaining at the start of the new marketing year this fall – to a shocking 750 million bushels.
A year ago, corn carryover was 2 billion bushels; this year it’s 62 percent lower, the smallest in 11 years.
The carryover cut serves as the starting bell for the great acreage race of 2007.
With December 2007 corn future fluttering near $4 and November 2007 soybean futures hugging $7.50, will farmers switch planned bean acres to corn to cash in on corn’s climb?
Some pencil-and-envelope math strongly suggests it.
Doing the math. First, 175 bushel corn at $4 turns an unworldly $700 per acre gross. Subtract, say, $350 per acre production cost, the net profit is, holy cow, $350. (Geez, at these price levels, is $4,500 per acre land too cheap?)
The same math for beans (50 bushels times $7.50 minus $250 in production costs) shows a per-acre net of $125. Any other year that fat-dripping net would be fabulous; in 2007 it’s a mere morsel compared to corn.
Even the time-honored method to measure corn-soybean equivalence – anticipated per bushel corn price times 2.4 to 2.6 – reveals bean prices need to climb to $10 per bushel to keep $4 corn from seizing soy acres.
Beans at 10 bucks? Hey, if I knew the answer to that question, my fingers would be shuffling $100 bills, not tickling a keyboard.
What seems certain, though, is that the futures market will be main battleground for this winter’s acre war.
Perfect nightmare. At stake is, according to the experts, a 10-million-acre shift from beans to corn.
That can happen – easily – given today’s price disparities unless beans join corn in the stratosphere.
Another near-certainty is a bleak, blood red 2007 headed toward livestock producers.
High, and going higher, grain prices is their perfect nightmare.
(Alan Guebert’s Farm and Food File is published weekly in more than 75 newspapers in North America. He can be contacted at


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Alan Guebert was raised on an 800-acre, 100-cow southern Illinois dairy farm. After graduation from the University of Illinois in 1980, he served as a writer and editor at Professional Farmers of America, Successful Farming magazine and Farm Journal magazine. His syndicated agricultural column, The Farm and Food File, began in June, 1993, and now appears weekly in more than 70 publications throughout the U.S. and Canada. He and spouse Catherine, a social worker, have two adult children.