June 4, 2008

    
US grain price hikes still driven by strong demand
 
 
US corn and soy prices are not solely dictated by energy or futures prices but by strong demand and the potential size of the 2008 crops, University of Illinois' Darrel Good, said.

Good said that contrary to what others suggest, energy prices are more fundamental to crop markets than ever before.

As to the argument that grain prices have been inflated by increased speculation in the futures market, he explained that there is no hard evidence to support that claim.

Good explained that corn and soy prices continue to be supported by a broad range of fundamental factors which include robust domestic and export demand and the size of grains this year.

The US feed demand of soymeal and corn is bolstered by the sharp recovery in hog prices. Higher cash and futures prices may slow the rate of liquidation of the herd.

As of May 1, the number of cattle on feedlots with a capacity of at least 1,000 head was down only 1 percent from that of a year earlier.

Placement of broiler eggs and chicks continues at a rapid pace, with broiler production over the next 10 months expected to be only 0.5 percent less than during the same time period last year.

Good explained that feed demand for corn during the summer months may be tempered by increased wheat feeding.