Speculation alert: US Corn prices surge

[Hannah Bell]

Driven by frenzied trading on the Chicago Board of Trade, US corn prices rose by 8.5 percent on Friday, the largest one-day increase since 1973.

Over a two-day period, corn increased by more than 15 percent before easing slightly to 12.7 percent, a two-year high. Wheat, soybeans and other basic agricultural products have also soared, threatening a global food crisis like that of 2007-08.

The US Department of Agriculture (USDA) on Friday revised its projection for US corn crop yields downward by 4 percent and predicted a “much tighter supply picture” for the food production industry. Citing high temperatures across the Central Plains and flooding in Minnesota, the USDA lowered projected yields to 12.7 bushels, down half a billion bushels from 2009. Last year’s harvest was a record 13.1 billion bushels. The USDA also estimated that its reserve corn stocks will fall to a 14-year low this winter.

Commenting to the Financial Times October 11, Lewis Hagedorn, an agricultural commodities analyst for JPMorgan Chase, said, “The market is going to try to ration demand wherever possible.”

The weakening dollar has led to rising speculation in the commodities markets, pushing up prices and increasing volatility, with investors attempting to hedge against currency devaluation and inflation resulting from an expected return by the Federal Reserve to a policy of “quantitative easing.” The Reuters-Jefferies CRB index, the benchmark index of raw materials including agricultural commodities and metals, rose to its highest level in two years on Friday. Buyers outnumbered sellers on the Chicago Board of Trade (CBOT) floor last week by a ratio of 31 to 1...

http://www.wsws.org/articles/2010/oct2010/corn-o13.shtml

[SoCalDem]

1. If you like ham, buy it now & freeze it

I heard that ham & pork products will double in price because of skyrocketing corn prices.. probably for beef as well.

[Hannah Bell]

2. remember the great rice hoax? the wheat hoax?

[SoCalDem]

4. Yes I do, but when so much livestock is corn-fed, a spike in corn prices

gives producers a license to "print money".. We don't eat a lot of meat anymore, so it's no biggie in this household. I do recall when wheat prices spiked & my (at that time) hungry teenagers (3 boys) were pounding down cereal that jumped to $4+ a box.. I was not above HIDING it from them:evilgrin:

[madrchsod]

3. blame it on the weather....it`s been really screwed up this year.

http://www.extension.iastate.edu/CropNews/2010/1008elmore.htm

http://www.sj-r.com/breaking/x1722971796/Illinois-corn-yield-estimates-cut-prices-spike

at least the beans have`t been hit as bad as the corn.

i`m watering my trees and shrubs because of the lack of rain since mid august.

[EnviroBat]

5. Ethanol restrictions were just relaxed.

They can now put 15% of it in gasoline. It was at a 10% max before this.