July 14, 2011


US corn prices to hit record amid US drought



If drought in the southern US spreads to the Midwest, corn prices may hit a record high at US$8.75/bushel before this year's harvest, according to Jack Scoville, a vice president for Price Futures Group in Chicago.


If the crop is not harmed by extreme weather and production is very good, prices may drop to US$4.50, Scoville said Wednesday (Jul 13) in a speech in Chicago. Corn futures for July delivery reached a record US$7.9975 on June 10. The contract has declined 9.1% since then.


"A lot will depend on what we see in the weather forecast the next few weeks," Scoville said. If it is dry, "you can probably throw some of these lower ideas out the window and look for significantly higher prices, as the US market tries to regulate demand against the potentially available supply."


Corn futures for December delivery rose as much as 4.6% Wednesday to US$6.88 a bushel on CBOT, the highest since June 15, before closing at US$6.7975. Prices have jumped in the past two days after the USDA cut its estimate for domestic inventories and hot, dry weather in the Midwest threatened yields.


Soy prices may trade between US$13.50 and US$10 a bushel this year, Scoville said. The market has a little bit less upside potential than corn because of ample supplies in Brazil, he said. Soy futures for November delivery settled at US$13.7975 Wednesday on the CBOT, up 1.6%.


Wheat may drop as low as US$5.50 a bushel in Chicago as the market "fights to keep its export business alive against severe price competition from Russia," Scoville said. Russia, once the world's second-biggest exporter, began allowing shipments July 1 after drought spurred a ban last year. Wheat futures settled at US$7.145 Wednesday on the CBOT, up 6.3% from Tuesday (Jul 12).

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