July 13, 2006

US corn and wheat prices at 10-year highs

Wheat and corn prices have reached 10-year highs, the USDA reported Wednesday (Jul 12).  

Season-average prices are US$3.70 to US$4.30 a bushel for wheat and US$2.25 to US$2.65 for corn, the department said in its monthly report.

Wheat prices are now higher as prolonged drought is expected to lower yields whereas the burgeoning demand for ethanol is adding ballast to corn prices.

Despite having slight rainfall last month in the central Great Plains, nearly half the winter wheat crop was rated "poor" to "very poor", compared to 17 percent last year.

The forecast for winter wheat production is 15 percent below last year, analysts said.

For corn farmers, exports picked up last month, prompting export forecast to be increased by 25 million bushels.

The corn crop is expected to be 10.74 billion bushels, up from last month's forecast of 10.55 billion bushels but down from last year's production of 11 billion bushels.

The soy forecast fell slightly over the past month as forward contract prices have been low. Production forecast dropped 70 million bushels to 3.01 billion bushels.

Meat production is expected to fall for the next two years as growth in chicken meat production slows down. Meanwhile, beef exports have picked up now that Canada has lifted all restrictions.