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More production land needed

By Staff | Dec 2, 2010

FORT DODGE – As demand for U.S. grains grows across the globe, David Kruse predicts an estimated 10 million new acres nationwide will need to be developed for corn and soybeans.

Kruse, president of CommStock Investments and Brazil Iowa Farms, of Royal, spoke to a crowd of about 200 at the 2010 Farm News Ag Show Wednesday held at Iowa Central Community College.

“This year there’s no crop with a surplus of acres to give to another,” Kruse said. “Overall, there’s a real battle for acreage as we look at 2011.”

He predicted some land will be taken out of the conservation reserve program as U.S. farmers struggle to keep up with national and international demand.

China’s rising middle-class population is the biggest importer of U.S. soybeans and that trend is expected to continue.

“China buys every soybean we produce that’s available to sell,” Kruse said. He added the demand won’t take away from U.S. livestock producers, but it has eliminated any carry over in the market.

Kruse predicted soybean prices would top at around $14 to $15 per bushels, however, he wouldn’t venture a guess for future corn prices citing variables of acreage competition and weather.

He did say that if Iowa experiences a drought caused by the La Nina weather pattern, the grain may need to be rationed to the point that some entities stop using corn, such as the ethanol industry.

But the $6 per bushels price of corn hasn’t stemmed demand from livestock or ethanol producers, Kruse said.

“We’re in the upper reaches, but we’re not at the peak of the bubble yet,” he said.

Overall, agricultural producers haven’t been hit by the recession that has affected other industries and should be safe as long as Washington doesn’t screw it up, Kruse said, and began citing some pieces of legislation for farmers to watch.

One is the blenders credit for ethanol producers that is set to expire at the end of this year. If it’s going to be extended, Kruse predicted the best time for passage would be during the current lame-duck session. Additionally, he said the ethanol industry will need government assistance to construct a proposed 1,800-mile ethanol pipeline to run from the Midwest to East Coast.

An audience member asked Kruse about the U.S. Federal Reserve Chairman Ben Bernanke’s decision, on Dec. 3, to infuse the nation with $600 billion of monetary stimulus.

“The American public said it didn’t want anymore (government) stimulus,” Kruse said. “So the federal reserve was looking for ways to compensate by loosening monetary policy.

Kruse said generally, whenever the feds expand monetary policy more money is put into the economy which is good for it.

“Bernanke looks at more data than I do,” Kruse said. “If his concern right now is deflation, then I think we need to take his word on it.

“If he made that decision, he must have a good reason for it.”

Contact Lindsey Mutchler at (515) 573-2141 or lindsey@messengernews.net.

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