Category: Agriculture

The devil is always in the details. This morning the United States Department of Agriculture said American farmers planted a little more than 87 million acres of corn this past spring. That was more than the 85 million acres analysts were expecting. Grain inventories were also better than expected.

That was great news to food processors and livestock producers who watched corn futures prices skid today. But they should probably hold off uncorking the champaign. Prices could bounce back to near $8 per bushel.

While USDA field representatives are being lauded for heading out to flooded farm fields last week to get up-to-date information from farmers, some analysts aren't sure their surveys will hold. First, only 1200 producers were polled and experts aren't sure their estimates will be accurate.

Cooper Power Systems is an example of how American ingenuity can help make the planet more energy efficient and environmentally friendly. The soy-based coolant the company developed a decade ago for electric power transformers is the result of some very forward-thinking engineers.

Patrick McShane was one of those engineers. After petroleum replaced polychlorinated biphenyls (pcbs) as a coolant a couple of decades ago, McShane figured it wouldn't be long before manufacturers would need to find an even more environmentally friendly coolant. The environmental movement was gaining a lot of steam in the late 1980s.

So, McShane began experimenting with food-grade oils. He tested two dozen oils including corn, palm, and soybean oil. McShane describes the discovery that soybean oil was more stable and performed even better than petroleum as an "ah ha" moment for Cooper Power Systems.

If you're like me, you may have certain items you look at it in the grocery store which help measure whether the store is well-priced or over-priced. For me, my kids' favorite box of corn muffins is one such item. Now, with the rising cost of ingredients that go into those muffins, I wonder if they're still a good measure. The price of milk, eggs, corn and flour are all up in recent months. And, it looks like those prices will continue to climb for the forseeable future. On top of that, the cost of fuel is surging, which means getting those muffins to my local supermarket costs more. The only thing I can hope for is that demand for those muffins drops as the economy slows...or that the store opts to absorb some of those higher costs.

Maybe my family needs to eat something else for breakfast.

Cellulosic ethanol is one of those energy techologies that's very exciting to explore, but the excitement has to be tempered with a hard look at the costs of production and how those costs stack up relative to other fuels. There's still a lot of debate about whether the true "carbon costs" of producing cellulosic ethanol might actually add more carbon to the atmosphere than the carbon presumably saved by not burning an equivalent amount of gasoline. Nevertheless, research and funding is streaming into this category.

As explain in tonight's "Green Options" report, this type of ethanol is brewed from the tough, fibrous material of leftover plant material. We're talking about sugar cane stalks, wood chips and bark, specially grown types of grasses, or even yard waste.

Ethanol bashing is all the rage these days. If you’ve been to the grocery store lately, you know why. Food prices are rising faster than they have in decades, and one factor – among many – is that corn crops once used for food and animal feed are now being converted into corn-based ethanol.

For my "Green Options" story (which will be broadcast this Thursday, May 15th), I met with a scientist-turned-businessman who is also talking trash when it comes to ethanol – but in a good way. His company Zymetis grows a bacterium that basically eats up waste materials – scrap paper, woodchips, cellulose fibers from waste streams – and spits out ethanol. So instead of using food to generate ethanol, Zymetis uses trash.

As a reporter well into my second decade of covering news, it is always fascinating to watch a story evolve. I covered bioengineered crops, also known as genetically modified organisms, when they hit the market a little more than a decade ago. Gmos aimed to revolutionize farming by creating hardier and more innovative crops. But, they did a lot more than that.

Bioengineered crops set off a storm of controversy. Environmental groups said the crops could be a health hazard and labeled them "Frankenfood." Gmo seeds were banned in most countries and many U.S. farmers were slow to adopt them. But, the global attitude towards genetically altered crops is changing.

This year the National Corn Growers Association estimates between 75 and 80 percent of the corn planted in the U.S. will be gmo. Monsanto, one of the largest producers of seeds, says genetically altered seeds are now planted in the largest agriculture producing countries in the world. And, the European Union is expected to vote on a plan soon that would allow farmers in member countries to plant genetically modified crops for the first time.

Since the beginning of our Republic, farmers and agricultural interests have accused speculators of manipulating markets and capturing the financial gains that ought to go to producers.

The lastest chapter in this long story was played out today at the Commodity Futures Trading Commission. Regulators brought together investors, ag producers and groups representing farmers to talk over recent volatility in the markets.

The investors say they're simply trying to hedge inflation risk for pension funds and other big groups. After all, people on a pension have to buy bread and beef and gas.

Groups representing farmers and bakers complain that the $175 billion poured into commodity funds in recent years has whipsawed the market adding to price swings.

The numbers are eye-popping: Rice up 123% this year, Wheat 99%, Corn 66% and Cotton 48%.

What's happening? CFTC economists say its all about demand in Asia, ethanol demand in the US, and poor crops in Australia and Canada.

Whatever it is, prepare to pay more at the grocery store.

I found it fascinating, in the process of reporting today's story on world food prices, to learn how the impact of changes in one part of the farm economy here in the U.S. can have such broad implications for the rest of the world. Perhaps you've read or heard about some of the riots that have occurred in parts of Africa, Haiti, and Bangladesh over sharply rising prices for rice. The less-obvious aspect of this story is how U.S. rice exports factor into the equation.

The U.S. exports nearly all the rice it grows...and ranks among the top five rice exporters in the world. The interesting fact, pointed out to us by Wachovia Securities grains analyst Bill Nelson, is that U.S. rice growers have in recent years devoted less acreage to rice planting -- and more to corn. Why? Because of the high prices ethanol producers will pay for corn. US acreage has dropped by some 600,000 acres in the past few years, and that's helped play a role in whether rice supplies are adequate to meet rice demand in the rest of the world.

The Chicago Board of Trade was established in 1860 as a place where buyers and sellers could trade commodities through futures contracts. Farmers, millers, and other users of commodities traded futures to hedge risk. Speculators took opposing positions to make money on the price movements of commodities.

It's a system that has worked beautifully for 160 years, until now. A century ago, and for that matter a decade ago, few retail investors had interest investing in corn, pork bellies, or natural gas. But, portfolio diversification and rising commodity prices have encouraged many investors to wade into commodities.

One way to get exposure to commodities is through a commodity index fund. These funds track one of two commodity indices and offset risk by purchasing futures contracts. And, they are buying a lot. Dan Basse, President of Ag Resource Company, thinks the funds have been pouring about a billion dollars a week into grain futures since the beginning of this year.

Just when you thought food prices couldn't rise any higher, guess what happened today? Corn prices headed toward the roof.

The U.S. Department of Agriculture threw a curve ball of sorts today at Chicago grain traders when it released its annual report on farmer planting intentions. Responding to high soybean prices, U.S. farmers said they plan to plant more of that crop this year than last. That means fewer acres will be devoted to corn. On top of that, the government said we don't have as much corn in storage as many experts had projected.

All of this news couldn't come at a worse time for food manufacturers, ethanol producers, and importers who are all fighting for corn. And, if they're paying more for corn, so will consumers. So, what , if anything can be done?