Flooding in the Midwest has devastated farmland and the promise of one of the best-ever corn harvests.
But the Corn Belt’s loss will likely be the Bible Belt’s gain this year.
Low output from corn-producing states – Iowa, Illinois and Missouri – will lower the supply of corn and drive up the price, said Eric Schavey, regional extension agent for the Northwest Alabama Regional Extension Service.
“It’s going to benefit us here,” Schavey said. “With high demand this year and acreage damaged, it’s going to drive prices up, so they are going to get more for corn.”
Demand for biofuels and ethanol, which use corn, are driving up corn prices, he said.
Corn prices have been climbing to all-time highs in recent months — from $3.75 per bushel in mid-2007 to $7.25 in the past few days — because of increased demand from livestock producers, overseas markets and the ethanol industry, which relies almost entirely on corn, according to the Associated Press.
“The farmers here hate that it happened to farmers in the Midwest because they know it’s their livelihood,” Schavey said. “But we are coming off two years of drought here.”
Drought is less of a threat this year because Limestone has 51/2 more inches of rain than at this time last year, he said.
Although the Midwest floods seem a long way away from 90-degree Alabama, it is slowing barge traffic on the Mississippi, and that could pose a problem here.
“It could affect us if the co-ops can’t get the barges in and they have to hold wheat and there is nowhere to sell it, but hopefully traffic will pick up,” he said.
In Iowa, the nation’s No. 1 corn-producing state, the Mississippi’s overflow has left farmers without crops to sell when they had been looking at the highest prices for corn in history. The Iowa Farm Bureau predicts at least $1.5 billion in losses.
Some farmers will be doubly injured because they sold corn futures at a lower price and, if they cannot produce the promised crop, will have to pay at a higher price.
Farmers often sell a portion of their crop in advance through futures contracts that guarantee a certain price for a specified number of bushels. Last fall, when corn was selling for between $3.50 and $4 a bushel but futures were trading at $5, a farmer might have decided to sell thousands of bushels through such contracts. Now, farmers without any corn to deliver could be forced to buy it at today’s $7 price to meet contracts that will pay them only $5.
Local News
June 26, 2008
Floods create demand for corn
With Midwest crop devastated, eyes turn to South’s harvests
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