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Excitement is in the air as Midwest farmers attempt to make plans for 2007 and beyond. Hardly a week goes by but what we read of another announcement of plans for an additional ethanol plant. And a plant that produces 100 million gallons of ethanol will take around 35 million bushels of corn. Reportedly, the big question is How many will actually be constructed? . More than 150 U.S. ethanol plants are either under construction, planned or in operation.
The 2006 U.S. corn crop came in at about 10.5 billion bushels and roughly 20% of the 2006 U.S. corn crop was used for ethanol production. Purdue agricultural economist Chris Hurt has predicted that 3.5 billion bushels of our 2007 crop will be needed to meet ethanol production demands. To meet this demand many economists predict that an additional 7 to 10 million acres of corn will be planted in 2007.
What we know is there is more and more ethanol production being put in place, corn prices are higher, more corn will be planted and there is more competition from Midwest farmers purchasing and leasing production agricultural land.
Who knows how long this ethanol cycle will last? There are many, many variables including government subsidies, $30 oil or $70 oil, alternative sources of bio-fuels, and an increase in fuel efficiency standards for cars.
One thing is sure today, and that is that ethanol is fueling the production land market in the Midwest and beyond.
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