Colorado Corn

U.S. farmers responded to higher corn prices by seeding record acres and harvesting a bin-busting crop. While the prospect of an unprecedented corn crop has eased price pressure somewhat, events overseas have kept prices higher than expected.

By Jerry W. Kram

When corn prices peaked at $4.50 a bushel in February, the outcry from editorial pages around the country was deafening. Ethanol was taking food out of the mouths of the poor and was responsible for raising the prices of everything from movie popcorn to filet mignon to cheddar cheese. Farmers, though, didn't miss a beat and responded by planting a record number of corn acres and harvesting a bumper crop. Since reaching that peak, corn prices have slowly glided back toward $3 a bushel in the Northern Plains states. It should be even lower, economists say, but production problems around the world have tightened global supplies.

U.S. farmers reacted to high corn prices as expected, planting more acres to corn than any time since World War II. More than 92 million acres were planted to corn in 2007. Growing conditions have been mostly good leading the USDA to forecast a near record average yield of 155.8 bushels an acre. Total production of corn for the year is expected to top 13.3 billion bushels, nearly 21 percent more than was produced in 2006.

Normally, such a bin-busting crop would lead to huge surpluses of corn flooding the market and tumbling prices. Instead, prices have remained stubbornly above $3 a bushel and crept a little higher as the harvest proceeded. This leads many to wonder, just what is holding corn prices up?

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