NCGA Expects Demand to Keep Corn Prices Strong (11-7-06)

Corn prices reached a 10-year high last week, and the head of the National Corn Growers Association (NCGA) sees that as good news for customers.

“Industrial uses such as ethanol production are helping to create a continuing, steady market for corn,” explains NCGA President Ken McCauley. “That’s good news for our traditional food and feed customers because it means more corn acres will be planted on a steady basis.”

In an informal survey taken last week, Bloomberg News found 16 of 22 grain traders and advisers were recommending their clients continue to buy corn despite the rise in prices. The U.S. Department of Agriculture is scheduled to report on crop production later this week and NCGA officials believe the report will show there is more than enough corn to meet present and future demand.

“Some analysts express concern that increased demand might cause a shortage,” says Rick Tolman. “In fact, we’ve seen the opposite – that supply will go up along with demand. Corn producers just want to make sure the demand is long term and consistent so they can plan for it, like any business.”

McCauley, who farms in northeast Kansas, believes biofuels and other industrial uses for corn add an important third leg to corn demand.

“The largest demand for corn is and will continue to be as food and feed,” he says. “Supplying the domestic and export markets is our primary concern. But there is plenty of capacity to fill the need for corn for new uses and we are meeting the challenge. Personally, I plan on planting more acres of corn next year.”