Bad weather fuel gains for corn, soy futures

Mother Nature wreaked havoc on producers of agricultural commodities in 2009, sending prices for staples like corn and soy on a wild ride only to end the year close to where they started.

An unusually late planting season in the US due to excess rainfall led corn prices to rally more than 30% in the spring; a serious drought in South America curtailed soy plantings and yields and sent soy prices soaring 50% in the first half. Prices later came down as weather conditions improved and eased supply worries.

Last year was "characterised by extremes" and "overall greater attention to weather," said Richard Feltes, head of commodities research at MF Global, a Chicago-based brokerage.

At the end of the year, corn prices were up 2% to US$4.145 a bushel at the Chicago Board of Trade, wheat was down 11% to US$5.415 a bushel, and soy gained 7% to US$10.3975 a bushel.

For 2010, corn is likely to be the price leader in the agricultural complex, in large part because higher ethanol mandates in the US will soak up one-third of total U.S. corn supply.

Not all food markets were immune to last year's economic downturn. Livestock prices suffered losses as cost-conscious consumers ate less meat. In the US, average red-meat and poultry consumption was estimated to have decreased by 2.6% to 210.6 pounds per person in 2009, according to the Department of Agriculture. As a result, prices for lean hogs and live cattle rose by 8% and 2%, respectively, last year.