Kansas State University Agricultural Economist Mike Woolverton had one word to describe the corn market when he spoke to farmers at last week’s Agronomy Institute in Parsons.

“Unprecedented.”

Citing the kind of prices growers dream about, Woolverton noted that today’s corn prices are driven by demand more than by supply.

The take-home message from that fact, he said, is that demand-driven markets take longer to correct. If it were short supply alone causing prices to soar, farmers would simply plant more the next year and, typically, get back to a surplus situation rather quickly.

Ethanol, of course, is the 800-pound gorilla in the room and Woolverton acknowledged that there are a few clouds on the biofuel horizon.

Some critics are warning of higher food prices, there are new environmental concerns and the livestock industry is certainly not pleased with ethanol’s impact on animal feed prices.

Woolverton said he feels the ethanol industry can, to a large extent, deal with those issues and he added that a 7 billion gallon per year production goal for ethanol is sustainable and it’s likely the next 7 billion gallons tacked on top of that can be handled by the nation’s corn farmers. Beyond that, he said, it will depend on political policy and other factors.

“Most people are predicting ethanol production in the 11 to 15 billion gallon range in the next three to five years,” Woolverton said. “I think that’s a pretty reasonable assumption. So what does that do to corn acres?

“Remember that yields are growing fast and a third of that corn for ethanol is going back to the livestock industry in the form of DDGS. I don’t predict that any real major growth in corn will be needed. Largely because of the rapidly increasing yields we’re seeing, I think we can a 15 billion gallon per year industry without any problems.”

For the wheat market, Woolverton had another word: “Astounding.”

He pointed out that nearly every major wheat producing country in the world, except the U.S., had a short crop last year. Australia, for example, has had roughly half of normal production for the past two years because of drought.

And with a 30-year low for ending stocks and little optimism about getting much in the way of relief from the South American crop, prices are basically rationing the dwindling supply.

Soybean users are also staring at nearly empty bins with a mere 19-day supply at the end of the marketing year.

That’s aggravated by uncertain harvest prospects in Brazil. In the northern part of the country, excessive rains have increased the incidence of soybean rust and delayed the start of harvest. In the south, dry weather during pod-fill has the industry worried about yield prospects.

And in China, the loss of 40 percent of the country’s rapeseed crop by snow and ice storms kicked up the soybean oil market recently to a new high of cents per pound.