From: Charles Abbott, Reuters
Published December 20, 2007 02:38 PM

USDA's Conner: Crop supplies "dicey" in 2008

WASHINGTON (Reuters) - U.S. farmers will win the race to grow enough corn, wheat and soybeans to satisfy food, feed and biofuel needs although 2008 will be "very dicey," said acting Agriculture Secretary Chuck Conner on Thursday.

"I would never bet against our farmers on this issue," Conner said in looking ahead to 2008 crops. For the second year in a row, zooming demand for U.S. crops will require a huge harvest to avoid shortfalls. "We have said it is going to be very dicey."

The wheat stockpile is forecast to shrink to its smallest level in 60 years before the new crop matures next summer. The soybean stockpile also could drop by 68 percent by next fall while this year's record corn crop assures an ample supply well into 2008.

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Livestock feeders face "a rough patch" with grain and soybean prices at record highs, "but we are going to get through," Conner said during a year-end review with reporters. He described the 2007 and 2008 crop years as a watershed time when more corn is needed to make fuel ethanol and disappointing wheat harvests in Australia and Europe deplete supplies.

President Bush signed an energy law on Wednesday requiring use of 36 billion gallons a year of renewable fuels, by 2022 with 15 billion gallons expected to come from corn-based ethanol. Production this year is forecast for around 6.5 billion gallons.

"I think we can march that (corn) production figure right up," said Conner, with the help of biotech seeds and improved cropping practices.

Farmers shifted land into corn in order to reap a record 13.168 billion bushels this year. High yields will be needed in 2008 to help meet demand for U.S. crops, says Darrell Good, University of Illinois economist. Good says high prices will encourage larger soybean and wheat plantings while corn sowings remain large, a difficult combination.

Conner also said:

--"We're watching very, very closely" to see if cropland should be released without penalty from the long-term Conservation Reserve. About 36.8 million acres are idled in the reserve. Contracts on 2.5 million acres, much of it in wheat country, expired this fall;

--Landowners show little interest in breaking Conservation Reserve contracts to return land to crops amid high market prices. Conner said it showed commitment to land stewardship. Landowners must refund their annual rent payments if they want to take land out of the reserve early;

--"We have not written off the possibility of reform in the farm bill." Congress should drop the ideas of higher crop support rates and tax increases in the bill, he said, and stop giving crop supports to the wealthiest Americans.

--There will not be a viable sugar-to-ethanol industry "with the current (sugar support) program as it stands." U.S. sugar prices are too high for ethanol to compete with lower-cost feedstocks, he said.

(Editing by Christian Wiessner)

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