Push for Corn Markets

February 23, 2009 11:42 AM

Corn's future, with potentially big genetic and agronomic increases on the way, looks promising. That means marketers better work just as hard as their plant breeding counterparts for farmers to profit from it all.

"It's value per acre that counts," says Craig Floss, Iowa Corn Growers Association CEO. "At the end of the day, it's all about making the market work and making a living. If there's a profit margin, it doesn't matter if the market price is $3 or $6 and the margin is the same. Price matters, but it's value per acre that counts."

Floss is thinking about how to sell those big crops as corn edges beyond the current national yield level of about 150 bu. per acre. If ethanol stays on track with the Renewable Fuels Standard set by the Environmental Protection Agency, it will be a good start toward increasing markets, he says.

"We're assuming as we ramp up to 2030, yields will get to the 250 bu. to 300 bu. per acre national average level. It's possible, and if it happens we will find ways to use that corn," Floss says.

"If you go back 20 years, just think about the things that have changed with corn markets since then. The ethanol industry was created because of a surplus of product. This country has called for a 36-billion-gallon renewable fuel supply, which is good for corn. There is no other viable feedstock."

Ethanol is quickly approaching the so-called "blend wall," where 10% of the national market would be satisfied—about the indus-try's current capacity.

"It's important to figure ways to get beyond the 10% blend," Floss says. "We're working to get from 10% to E15 and E20. It will help the ethanol plants and create greater demand. Corn is the only feedstock available at this time, and with production ramping up, we will have more than enough corn to pass the 15-billion-gallon mark and still feed all other markets," he says.

"The number of stations with E85 flex-fuel pumps is growing. We've opened our 100th E85 station in Iowa. One of 10 vehicles in Iowa can burn up to 85% ethanol. Our surveys show that 75% of the state's consumers choose ethanol. Retailers are seeing that this is the coming thing. I think higher ethanol blends will be approved for legacy vehicles, which will be important for going beyond the 10% blend.

"Consumers are beginning to recognize the renewable fuels industry is huge for our country. It's a part of the current economy and the new economy. It's more than just a thing for corn farmers. It's putting money in pockets that didn't have it before," Floss says.

He expects corn to be able to meet its traditional customers' needs and anticipates the food/fuel debate to moderate as yield increases.

"From a demand perspective, we had enough corn last year to meet market needs. I know it was a challenge with livestock producers when corn prices jumped, and they do not believe the renewable fuel standard is best for them," Floss says.

"But we know livestock industry growth will be relatively flat over the next 10 years. Our marketplace growth is going to come in ethanol. We'll meet all the needs of food and livestock and export markets and still grow enough corn to meet what the Renewable Fuels Standard calls for," Floss says.

Exports, a recent bright spot for U.S. ag marketers due to the weak dollar, would further boost markets by remaining solid. "We've seen very little growth in export markets in the past
20 years. Then in 2008, exports shot up," Floss says.

"Our goal is to figure how to export more corn through meat, through pork and beef. We're partnering on this with the livestock industry," he says. "In this state, we're very fortunate to have an exciting working relationship with our livestock partners like the U.S Meat Export Federation. We still expect growth overall in exports."

You can e-mail Charles Johnson at cjohnson@farmjournal.com.

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