Business in brief: Ethanol demand boosts corn prices

Ethanol plants and foreign buyers are gobbling the nation’s corn supplies, pushing prices as high as $3.40 a bushel, the Agriculture Department said Friday.

Farmers haven’t seen prices this high for more than a decade. The monthly crop report forecast even better prices than in December, raising the estimate 10 cents to $3 to $3.40 a bushel.

Robust prices have made corn more expensive for livestock feed and as food for people. But a drop-off in those uses was more than offset by growing demand from foreign markets. Exports are forecast to claim 2.25 billion bushels of corn from last year’s crop, up from last month’s forecast of 2.2 billion bushels.

Overall, the corn crop came in at 10.5 billion bushels, slightly under last month’s forecast of 10.7 billion bushels. Anticipated yields were 2.1 bushels lower per acre, and the area planted and harvested was slightly smaller than expected.

The amount of corn used for ethanol, forecast at 2.15 billion bushels, was unchanged from last month.

Nationwide, supplies of corn are expected to drop to 752 million bushels, a drop from last month’s forecast of 935 million bushels and a steep decline from last year’s supply of 1.967 billion bushels.

Democrats look to lower loan rates

Following up on an election-year promise, House Democrats said Friday they plan quick action to lower interest rates for student loans.

Their proposal, scheduled for a vote next week, would cut interest rates on some student loans in half. However, the college tuition plan has been scaled back since it was first touted on the campaign trail last year.

The interest rate relief would apply only to need-based loans and doesn’t help people who take out unsubsidized student loans – a distinction not made in the campaign literature Democrats handed out before winning control of Congress last fall. The measure also abandons a pledge to reduce rates for parents who take out loans to help with their kids’ college costs.

The rate cut for subsidized student loans – from 6.8 percent to 3.4 percent – would be phased in over five years.

The measure would cost slightly less than $6 billion, according to the Congressional Budget Office.

“Education Secretary Margaret Spellings said this week she would prefer that Congress increase Pell grants, which go to the poorest students and do not have to be paid back.