Hey, We Found Corn!

By Brad Zigler

The classic good news/bad news story played itself out Monday in the CBOT corn pit. Digesting the Agriculture Department's latest quarterly acreage report, corn futures gapped lower into limit-down territory, below $7.25 a bushel.

It turns out Minnesota farmers are raising more corn than earlier expected, mostly at the expense of spring wheat.

CBOT Corn (July '08)

It's not hard to see why. Corn prices looked attractive enough in the May planting season to entice some growers in the northern tier to scotch their acreage allocations for hard spring wheat and other commodities in favor of maize.

Hard red spring wheat fetches $11.75 a bushel now, but only yields about 36 bushels an acre. An acre of corn can yield up to 150 bushels, so even at $7.25, a farmer's productivity - and more importantly - income, can be doubled by switching.

Nationally, farmers told the Agriculture Department that they're growing 87.3 million acres of corn, 1.3 million more acres than reported in the March Prospective Plantings survey.