June 4, 2007

Prices of US corn up 60 percent this year

The US Department of Agriculture (USDA), in its May agricultural prices reports, said corn prices, as expected have jumped 60 percent this year compared to 2006 due to the continuous surge in demand from ethanol.

May's price for corn was US$3.48 per bushel, a 9-cent increase from April alone. In May last year, corn cost only US$2.17.

Kevin Barnes, chief of USDA's Environmental, Economics and Demographics branch, points out that the report reflects mid-month prices, and that prices tend to fluctuate through the end of the month. Whether prices will stabilize remains uncertain, he said.

In April, USDA released a report indicating that farmers intended to plant 90.5 million acres of corn this spring, the largest such sowing in 63 years wherein experts have translated the volume into 12.5 billion bushels of corn.

However, Barnes says the increased acreage won't exactly diminish corn prices as many factors such as export demand and ethanol are the main factors for pushing the grains' prices further.

Soaring corn prices have also pressed prices up for other commodities, as farmers devote fewer acres to crops like soybeans. As of mid-May, the price for soybeans was US$7.15 per bushel, up from US$6.88 in April and nearly 26 percent higher than the May 2006 price of US$5.58.

USDA reported that the average price for all crops in May was 3 percent higher than April and 24 percent higher than the same period a year ago.

Meantime, the average price for meat animals rose slightly by 0.8 percent from April, and 11 percent higher than last year of the same period. The May hog price, at US$52.00 per hundredweight, is up US$4.70 from April and US$3.80 higher than a year ago. The May beef cattle price of US$93.50 per hundredweight is down 80 cents from last month but US$11.30 higher than May 2006.