07/25/06 Will corn-ethanol demand take wheat acres

Farm and Ranch July 25, 2006 Biofuels are not just the rage in the U.S. but around the world. And as grain market analyst Dan Basse, President of AgResource, sees it, the world is going to have to grow a lot more corn to meet the demand for ethanol. And that has ramifications for wheat. First, here's what Basse says has to happen to U.S. corn acreage to meet growing ethanol demand. Basse: "I am willing to forecast that the U.S. needs to find an additional 4 ½ million acres of corn in 07 and over 10 million acres of corn in 08. Ladies and gentlemen we when we are talking about seedings of 80 million acres today that is a big chore to pull ten-million acres out of other crops. Whether that comes from wheat, soybeans, or cotton is unknown at this time but it is a tremendous change in seeded acreage." To get those acres, Basse says the market will have to take corn higher and he thinks that means corn rallying above $4 over the next 12 to 16 months, the timing depending in part on the outcome of this year's U.S. corn crop. And Basse sees wheat as one of the crops that will lose acres to corn around the globe, which isn't all bad. Basse: "And as such I think we are looking at persistent length of time in which global wheat stocks will be falling and prices will be rising." Basse made his comments at the Chicago Board of Trade's recent Dow Jones Indexes-AIG Mid-Year Commodities Outlook. I'm Bob Hoff and that's the Northwest Farm and Ranch Report on the Northwest Ag Information Network.