Brian Hefty

Brian Hefty’s Baltic, S.D.-based Hefty Seed Co. sells several different brands of seed corn, so the potential of several million more acres of corn in 2007 excites him just like it does every other seed marketer.

“I asked my (Chicago Board of Trade pit trader) cousin what he thought corn would top out at,” Hefty said. “He said, like any trader usually says, that he really didn’t know. But he did predict the top would hit $4.25 on the Board. He doesn’t see a $5 push like it did 10 years ago. ... There just isn’t enough momentum.

“But he did tell me that he thinks this corn market really could crash (in 2007). When corn acres go up that much, the market will work its way down. Also the Chicago Board people see soybean acres being the big loser with spring wheat acres also taking a hit to corn.”

Can’t fault producers

Hefty, himself a farmer with his brother and father, certainly doesn’t fault producers for going big on corn this year. He doesn’t see enough Conservation Reserve Program contracts expiring to provide “new” land for new corn acres. “Those are 10-year contracts so if contracts expire in late 2007 with farmers gearing up for even more corn in 2008, the risk of cheaper corn prices could be a reality by then.” He noted that most CRP acres are marginal ground, so he doesn’t see a big interest in turning that land to corn.

Bigger issues with going into corn-on-corn cropping are residue and total costs of growing continuous corn. “You’ll be spending more on nitrogen; you might need more dollars invested for phosphorous, potassium and micro-nutrients than you would going into soybeans; and you have the extra residue which likely means more tillage and modifying your planter.

“On our farm I figure we’re spending an extra $40 per acre if you go into continuous corn. So you’ve got to have more money out of that corn crop compared to soybeans. We’re still going with soybeans on our farm. The logic being that as corn acres go up, soybean acres go down and that could mean some stronger soybean prices down the road.”

Zone tillage for continuous corn

Does continuous corn suggest a stronger future for zone tillage, something the Heftys have promoted strongly?

“Yes, I think so because of the basic fact that continuous corn means more tillage,” Hefty said. “The more tillage, the more compaction. Plus the longer we have $3 corn, the stronger the incentive to do an even better job in the production of that corn. Land is expensive. Rent is expensive. If we can raise just a few more bushels on the ground we already have, then we’re all better off.”

He also noted corn’s economic impact. “You think of the billions of added dollars that get pumped into our nation’s economy with a $3 corn price and it’s a windfall for everyone in rural America, not just the farmer,” Hefty said. “That’s why zone tillage starts fitting. It cuts costs, minimizes soil compaction, and uses limited soil moisture more effectively. We tell producers you’ve got to study that land, both what’s below the soil surface and what’s above to get the true picture on your crop production capabilities. If you’ve got a good root structure, a lot of other challenges take care of themselves.”

Ethanol’s future

Hefty’s analysis of investments in ethanol plants? “I think ethanol is a good long-term investment. Even if corn drops to $2, they’ve got cost of production down under $1; say 95 cents or so. And I’m now hearing of one of the better ethanol plants getting 3.2 gallons ethanol per bushel of corn (standard has been in the 2.6 to 2.7 gallons/bu.), which gives even better margins.”

With inputs like new corn hybrids, new processor technologies and better fermentation yeasts continually improving, Hefty said ethanol facilities should be up to 3.5 gallons/bu. in the next three to five years.

“When producers ask me how can a plant make it with $3 corn? Well even then their cost of production is only about $1.25/gallon,” Hefty said. “Plus they have the distiller dried grains product, which price goes up as corn prices go up. So there’s good money in these good plants, regardless of the price of corn. A lot of these ethanol plants bought big amounts of corn last summer and early fall for $2 to $2.25 so they’re OK.”

Cellulosic feedstock

Will cellulosic feedstocks relieve corn pricing? Certainly not for the immediate future, according to Hefty. He sees continued volatility in corn pricing simply because of the unpredictable nature of total corn production each year. You can have the acres, but you also need the right weather, he said.

Hefty noted that costs of production with cellulosic feed stocks, even corn stover, just isn’t penciling out right now and likely won’t for a few years. The DuPont technology being worked on with Broin Industries will make it work eventually, however, he said. “Cellulosic conversions to ethanol are where corn was 25 years ago.”

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