CHICAGO (Reuters) – Grain farmers in the Midwest may want to pinch themselves.
..."It's a super cycle. It's only happened four times in the past 100 years," Kohl told U.S. agricultural bankers at their annual meeting this month.
But can it last? Analysts often cite the rise of China and India as the main driver of the boom, with their hundreds of millions of hungry and wealthier consumers lining up at the table for grain from the United States, the largest food exporter in the world. But the single biggest consumer which has changed the game in farm country in recent years is closer to home: ethanol. The alcohol-based fuel has, in less than a decade, gone from consuming less than 10 percent to currently 40 percent of the giant U.S. corn crop. That enormous slice of the pie -- which exporters and starch makers and food processors and livestock feeders must also still fight for -- is the key to the recent farm boom. "That is a huge factor" and likely the single biggest cause behind the surge in corn prices and farm income, according to Leland Strom, chief executive of the Farm Credit Administration, regulator of the government-linked Farm Credit System, the largest real estate lender to American farmers. The dynamic has been simple. The 2007 U.S. energy bill mandated that a total of 15 billion gallons of renewable ethanol must be produced by 2015 for energy independence. Almost all that fuel is "blended" with gasoline. Demand for corn skyrocketed, with prices of corn and then corn land following it up. Other grain prices have risen just to assure that farmers don't all switch to corn. Farmers have reaped the benefits, as have their suppliers from John Deere to Monsanto to fertilizer producers to land auctioneers. "There are a lot of people betting a lot of money on land right now. Land wouldn't be going for $9,000, $10,000 an acre in the Corn Belt unless people were convinced that corn prices were going to stay strong," Read on at: http://old.news.yahoo.com/s/nm/20111120/us_nm/us_usa_farming_bubble
..."It's a super cycle. It's only happened four times in the past 100 years," Kohl told U.S. agricultural bankers at their annual meeting this month.
But can it last? Analysts often cite the rise of China and India as the main driver of the boom, with their hundreds of millions of hungry and wealthier consumers lining up at the table for grain from the United States, the largest food exporter in the world. But the single biggest consumer which has changed the game in farm country in recent years is closer to home: ethanol. The alcohol-based fuel has, in less than a decade, gone from consuming less than 10 percent to currently 40 percent of the giant U.S. corn crop. That enormous slice of the pie -- which exporters and starch makers and food processors and livestock feeders must also still fight for -- is the key to the recent farm boom. "That is a huge factor" and likely the single biggest cause behind the surge in corn prices and farm income, according to Leland Strom, chief executive of the Farm Credit Administration, regulator of the government-linked Farm Credit System, the largest real estate lender to American farmers. The dynamic has been simple. The 2007 U.S. energy bill mandated that a total of 15 billion gallons of renewable ethanol must be produced by 2015 for energy independence. Almost all that fuel is "blended" with gasoline. Demand for corn skyrocketed, with prices of corn and then corn land following it up. Other grain prices have risen just to assure that farmers don't all switch to corn. Farmers have reaped the benefits, as have their suppliers from John Deere to Monsanto to fertilizer producers to land auctioneers. "There are a lot of people betting a lot of money on land right now. Land wouldn't be going for $9,000, $10,000 an acre in the Corn Belt unless people were convinced that corn prices were going to stay strong," Read on at: http://old.news.yahoo.com/s/nm/20111120/us_nm/us_usa_farming_bubble
