5. Unfavorable Ethanol News Lowers U.S. Corn Prices
Fears over an impending U.S. ethanol trade agreement with Brazil lowered corn prices last week, says Ray Grabanski, President and the Principal Owner of Progressive Ag risk management services, Fargo, ND.

"The rapid increase in ethanol for fuel is what is driving the U.S. corn market," says Grabanski. "The comments by President Bush that he'd like to cooperate with Brazil on ethanol and that he has a set of proposals that they're looking at made the corn market nervous. Any additional negative news about ethanol will continue to lower the market."

Currently the U.S. has a 55 cent/gal. tariff on foreign ethanol and a 51 cent/gal. ethanol blending tax credit, says Grabanski. Any change in those two policies could dramatically lower the potential prices U.S. farmers receive for corn, he says.

"It just wouldn't make sense to reduce the tariff on ethanol and have the taxpayers pay to blend in foreign ethanol," he says. "Ethanol is the one good thing we have going right now in many rural areas, and any alteration in ethanol policy could change all that."

Corn prices still have a chance to spike upwards, depending on the outcome of USDA's March 30 quarterly Grain Stocks and Prospective Plantings reports, he adds. "We've had a nice rally coming into planting season, but the final acreage report is going to be important in determining which direction corn prices go -- and they could go either way," says Grabanski. "So, there's nothing wrong with protecting yourself with puts ahead of this report."

Barring weather scares this season, the next chance for a price rally after planting would be USDA's June 30 plantings report, he adds. For now, though, "the threat from drought has recently been reduced," says Grabanksi. "A lot of precipitation has fallen in the driest areas and healed some potential soil moisture ailments."

The biggest weather threat to U.S. corn production right now is the potential that wet conditions in the Eastern Corn Belt could significantly delay planting, he adds. However, even if corn planting is hampered in this area, other areas of the country are likely to plant significantly more corn acres, including North Dakota and South Dakota.

"There will be a big switch from spring wheat to corn here, due to the increased profitability from growing corn," says Grabanski. "That might reverse itself though, if changes are made in U.S. policy towards ethanol."

For more information about comments made by President Bush on cooperating with Brazil to promote biofuels production and use, click here: www.whitehouse.gov/news/releases/2007/03/20070309-4.html.
For more information on Progressive Ag, visit its Web site at: www.progressiveag.com/index.jsp?pageid=103.

By John Pocock

6. Bean On Bean Acres More Profitable For Some?
More growers are focusing on continuous corn because of the biofuels movement, but beans on beans could become more likely in areas where the corn yield potential is lowered, says a Purdue University expert.

"This focus on biofuels is causing a shift in production systems. In areas where a grower can continuously grow 200 bu.-plus corn, there may be a shift to continuous corn at least in the short run," says Shawn Conley, Purdue Extension soybean specialist. "However, in areas where the soils are poorly drained and the yield potential for corn is significantly less, we may see more growers focus on continuous soybeans."

As with continuous corn, growers planting beans on beans are going to have to make some adjustments to their crop systems to deal with various issues, Conley says.

To read more about growing continuous soybeans, click on the following Ag Answers Web link: www.agriculture.purdue.edu/aganswers/story.asp?storyID=4431.

Source: Purdue University