July 28, 2010

 

US corn prices may jump 9% in 2011

 

 

Corn prices will average about 9% more in the first three months of 2011 than they have since July 1 as smaller crops in Europe, Russia and Ukraine will boost demand for US exports to Asia, according to Rabobank Group.

 

The price will average US$4.25 a bushel on the CBOT in the three months ending March 31, said analysts. The price averaged about US$3.91 this month at the close of trading yesterday.

 

Prices are seen bullish due to the drop in world grain production, analysts said, adding that an additional feed-grain demand is expected to be moving back to US corn to avoid the risk of additional output losses in Europe and the Black Sea region.

 

The average yield in US may fall to 162 bushels an acre, less than the 163.5 bushels forecast earlier this month by the USDA and a record yield of 164.7 bushels last year, analysts said.

 

Analysts said yield estimates will become increasingly important to determine the amount of corn that can be used to meet demand, noting that the US supply already looks tight with the USDA using an above-average yield forecast.

 

Corn also may rise because US supplies are cheaper for importers in China as corn futures on the Dalian Commodity Exchange have risen 4.1% this year compared with an 8.9% drop in Chicago futures. Dalian corn is trading at a US$3.46 premium to Chicago futures.

 

China's expanding economy is boosting demand for meat, milk and eggs, as rising incomes allow people to buy more food.