Floods push US corn prices by 3 percent to records

US corn prices were up by 3 percent on Monday (June 16, 2008) to a record as Midwest floods heightened worries on corn stocks not meeting demand for food, feed and biofuel.

In Iowa, when the corn crop was almost waist-high, the flood wiped out 530,000 hectares of corn and 810,000 ha of soy, with some 16 percent of the state's 10 million ha of tillable farmland underwater.

Since the start of June, tornadoes, heavy rain and flooding have cut a watery path across the US region.

Local officials fear that worse flooding may lie ahead as rain-gorged tributaries spill into the Mississippi River system.

Record prices for grains this year have exacerbated inflation, forcing governments to increase interest rates as the economy slows.

David Cohen, director of Asian economic forecasting at Action Economics in Singapore, said inflation pressures are building around the world stoked by food and fuel prices.

CBOT futures contracts for new crop July corn 2009 surged as high as US$8.07 per bushel by late afternoon in Asia, the highest for any corn contract, while July 2008 corn rose to a record US$7.57 and soy also gained.

Short supply and strong demand triggered prices to jump by a quarter since the start of the month, increasing financial pressure on livestock breeders, exporters and ethanol makers.