Sure, corn carryover supplies have been reduced, yields have been lowered in some areas and ethanol demand is exploding. But, we're also going to post one of the largest corn harvests in history.

The base for corn demand has been altered and that's a reality the cattle markets and farmers will have to understand. The implications are real. The market is behaving like 3-4 weeks ago when it woke up and everybody decided ethanol production would require 20% of the corn crop. It's as if this increase had never crossed anybody's mind.

Funds, speculators and everyone has jumped in for the ride, sending the markets to new contract highs one right after the other. However, as is often the case the market is also likely overreaching against itself.

Already the experts are predicting that 2007 will see the largest corn plantings in history. Perhaps the market has sent the signal to plant corn from fence row to fence row. But as a good friend explains it, you bring flowers and then a very big diamond when you're proposing marriage, once you're married, flowers once a year usually suffices. There may be some wisdom there for those who are talking about $5/corn.
-- Troy Marshall