Wells Fargo projects 88 million acres of corn in 2008, lower than other estimates; corn prices at $5 per bushel for ‘08

Wells Fargo Senior Agricultural Economist Michael Swanson projected that US farmers would plant 88 million acres of corn in 2008, and that demand in Nebraska from ethanol producers would exceed 1 billion bushels.

In 2007, farmers achieved a nationwide yield of 155.8 bushels per acre, and with yields improving 1 percent per year on the historical average, this equates to a 13.85 billion bushel corn harvest.

With oil prices expected to stay above $90 per barrel, and closing at more than $100 per barrel this past week, Swanson said that the price of corn has increased to more than $5 per bushel on futures boards, making the potential value of the US corn crop more than $69 billion, up from less than $30 billion in 2004.

The USDA recently confirmed its 2007 corn production estimate of 13.3 billion bushels, reduced its projected use of corn by the ethanol industry in 2007-08.

The revised 2007-08 corn ethanol forecast is 3.2 billion bushels, down from 3.4 billion forecast in August. For the year ending August 31, 2007, the corn ethanol industry used 2.1 billion bushels. At current industry yields of 2.7 gallons per bushel, this translates to 8.6 billion gallons of ethanol.

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