NEW YORK (CNNMoney.com) -- Fueled by surging ethanol production, U.S. farmers are set to plant more corn in 2007 than in the last 63 years.
U.S. farmers plan to grow corn on 90.5 million acres, up 15 percent from 2006, according to an Agriculture Department report issued Friday. That's the most acreage planted with corn since 1944, the last full year of World War II, when 95.5 million acres of corn were planted.
"This really points to a record corn crop," said Cristoph Berg, a commodities analyst with F.O. Litch, a commodity research firm.
The news sent corn prices plummeting. The December contract, the first contract that will trade after the fall harvest, fell 20 cents to $3.83 a bushel on the Chicago Board of Trade before trading loss-limiting rules kicked in and prevented prices from falling any lower, a rare occurrence.
Berg said more corn may ease fears that rising ethanol production will push up the price of some foods.
On the other hand, the increase in corn is expected to come at the expense of soybeans, which are used in all sorts of oils and margarine, and wheat.
Acres devoted to soy production are estimated to be 67.1 million in 2007, down 11 percent from last year, the report said.
Corn is the main ingredient in U.S.-made ethanol, the gasoline substitute being pushed by nearly everyone in government to offset the country's use of oil and cut greenhouse gas emissions.
Ethanol is currently blended with gasoline at rates of up to 10 percent to make it burn cleaner, replacing the toxic additive MBTE last year.
But with fairly little modification, normal gasoline engines can run on a blend of 85 percent ethanol.
E85 cars and filling stations are not yet widespread, but that could soon change.
President Bush has proposed cutting the nation's gasoline consumption by 20 percent over the next 20 years, mainly through the use of ethanol.
Auto companies have embraced the fuel as midterm replacement for fossil fuels until they can commercialize hydrogen technology, still several decades away.
Detroit recently pledged to make half its autos capable of running on E85 by 2012.
The hope is that a cheap enzyme will soon be found to make cellulosic ethanol, which can be made from wood chips or sagebrush or really any plant matter. Until then, all eyes are on corn.
Although corn prices fell Friday on the plantings report, they are still near a relatively expensive $4 a bushel. The commodity usually trades around $2 to $3 a bushel.
And while corn production production is expected to soar, corn demand is also keeping pace.
"I would still say there is no room for error," said Terry Roggensack, a grain specialist at the Hightower Report, a commodities newsletter.
Roggensack said the country produced 10.53 billion bushels of corn last year. If all goes well this year, that number could jump to 12.4 billion bushels.
But corn demand for ethanol is also soaring, and is projected to go from 1.6 billion bushels last year to 2.15 billion bushels in 2007. By 2009 that number is expected to be 4.3 billion bushels.
Roggensack said despite the big jump in corn plantings this year, a lousy summer growing season could easily send corn prices past their record high of $5.54 a bushel, set in 1996.
__________________
The great corn gold rush
Beef: What's for dinner could cost more 
