December 23, 2011

US 2012 corn prices may slide on higher yield

Corn output in the US is seen to increase by 4.8% to 867.5 million tonnes in 2011-12, according to the USDA's estimates.

This rise in production in US coupled with the good harvests in China and Argentina, may cause a decline in corn prices in 2012 in spite of the continuing strong demand.

Corn, which is used as feed for livestock, saw its prices increasing by 100% in the past two years due to increase in global meat consumption. Global production of livestock like chicken, veal, turkey and pork is expected to touch 248 million tons in 2012, according to the estimates of USDA.

The Food and Agriculture Organization (FAO) has estimated that per capita consumption of meat will rise in every year till 2020 and total demand for meat is likely to increase by 73% in the next 30 years. Higher production of meat means higher demand for corn and other livestock feed items.

Corn prices have declined by only 2.4% in 2011 against the 19% decline in Standard & Poor's Agriculture Index of eight commodities.