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Corn plantings expected to rise

February 08, 2007|From Reuters

CHICAGO — Mexico's tortilla crisis, which has led to demonstrations in Mexico City, is encouraging U.S. farmers to plant more white corn this spring in hopes of selling it south of the border, traders and growers said.

Growing U.S. demand for crop-based ethanol has pushed prices of yellow corn to a 10-year high, which in turn has lifted prices of white corn and the cost of tortilla flat bread that accompanies almost every Mexican meal. White corn is a specialty crop for food, and most yellow corn goes to livestock feed or ethanol production.

U.S. farmers can make an extra 55 cents to 60 cents a bushel by growing white corn instead of yellow corn -- an additional $15,730 for a farmer with average yields and 200 acres. Usually, the difference in price is about 25 cents to 30 cents, traders and producers said.

"This year there are higher premiums being paid for new-crop corn than what farmers have seen the last couple of years," said Rod Schlatter, specialty corn and grains manager for Bartlett Grain Co. in Kansas City, Mo.

Those higher prices may cause U.S. white corn plantings to rise 25% this year, said Chris Morley, who publishes the Orville Fisher white corn update, an industry newsletter. Farmers planted 620,000 acres last year, up from 604,000 acres in 2005. U.S. white corn plantings hit a high of 1.2 million acres in 1999, he said.

Mexico set tariff-free quotas in January to import corn to try to bring down tortilla prices. Mexican tortilla prices skyrocketed in January, climbing 25% to about 10 pesos (91 cents) a kilogram in Mexico City. Tortillas used to sell for about 5 pesos a kilogram.

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