High corn prices to help ethanol plants

By Lisa Haarlander

CHICAGO (Reuters) - Corn prices surging above $4 a bushel will help U.S. ethanol makers by spurring farmers to plant more acres this spring, ensuring a steady stream of starch for the expanding industry, the head of an emerging ethanol producer said on Wednesday.

"We like the fact that corn prices are high," said Todd Carter, chief executive of Panda Ethanol (PDAE.OB: Quote, Profile, Research, Stock Buzz), speaking at the Reuters Global Biofuel Summit. "It's short-term pain that will yield much longer-term gain."

Corn futures at more than $4 a bushel will spur U.S. farmers to plant an additional 10 million acres of corn, above most estimates for 7-9 million additional acres, Carter said.

As more corn enters the market, prices will drop during the next two years to between $2.70 and $3.20.

"We don't think they are going to be sustainably high," he said.

The chief executive of analytical firm Informa Economics, closely watched by traders in Chicago, also said at the summit on Wednesday that corn futures could fall below $3 by the end of the year.

HIGH CORN PRICES COULD HURT OLDER PLANTS

Corn prices above $4 are likely to cause the most problems for older, less efficient ethanol plants, Carter said.  Continued...