WASHINGTON - Ethanol plants and foreign buyers are gobbling up the nation's corn supplies, pushing prices to a 10-year high, the Agriculture Department said yesterday.
That is costing farms more to feed their livestock.
"It makes a lot of difference," said Doug Wewe, who raises cattle in Pretty Prairie, Kan. "We've got to keep them gaining weight."
Wewe feeds his cattle around 4,800 pounds of corn each day, about 85 bushels.
Corn futures for March delivery rose yesterday 20 cents, the maximum allowed, to $3.965 a bushel, on the Chicago Board of Trade. That is the highest price since July 1996.
DuPont Co., the Wilmington, Del., company that is the biggest U.S. producer of seed corn, and Monsanto Co. may benefit from rising demand for corn as the companies boost production.
"Additional corn acres will be planted in 2007 due to increased demand for corn for ethanol production," Citigroup analyst P.J. Juvekar wrote in a research report. This is positive for DuPont and Monsanto, the world's largest developer of genetically modified crops, he said.
DuPont shares rose 81 cents to $49.73 in New York Stock Exchange trading. Monsanto rallied $1.15 to $51.15 on the NYSE.
The high corn prices are forcing some cattle ranchers to switch to hay or other feed.
In Wheatland, Wyo., Randy Stevenson said he was feeding his cattle less corn and more distiller's grains, the byproduct of making corn-based ethanol fuel. Recent drought and high feed prices are squeezing cattle producers.
"It's very painful," Stevenson said.
But corn farmers say the drop in domestic demand is made up by gains in foreign markets.
Strong demand is eating into corn supplies, which are expected to drop from nearly two billion bushels to 752 million bushels, yesterday's government report said.
That doesn't mean consumers will have less corn to eat, because the corn grown for livestock and fuel is different from the sweet corn used as fresh corn on the cob and canned or frozen corn.
Eventually, sustained high corn prices could lead to higher grocery bills, but so far, there has been no boost in what consumers pay for beef or pork that are fed corn.