March 7, 2011

US corn prices to reach record

Although farmers have not started the 2011 planting season, corn prices are already approaching a record high this summer.

Two economists said in a forecast released on Thursday (Mar 3) that demand for corn for food, ethanol and export is causing high prices. Beef and pork prices are already at record highs and they are beginning to emerge at the supermarket.

"It's certainly getting a lot of attention now that higher commodity prices are being passed along," said one of the economists.

The second economist said that unusually low year-end supplies of corn also contributed to higher prices.

Corn for May delivery closed at US$7.36/bushel. The record US$7.61/bushel took place in June 2008.

Both economists said the delicate balance between supply and demand leaves little room for a poor corn crop this summer.

The next big indicator will be a March 31 forecast of 2011 planting intentions from the USDA, which should show whether farmers intend to plant more corn to meet demand, one of the economists said.

"Everyone will be on pins and needles. It will be the first survey that takes a look at what farmers plan to do," he said.