Corn prices grow to record high

Lower corn supply and higher demand for the crop from China and ethanol producers will push prices to record highs, according to Rabobank.

The Dutch agricultural bank said in a report that March corn futures on the Chicago Board of Trade have risen 12% since the start of the year, putting it ahead of other commodities in the “battle for acres” in the US, the world’s biggest corn exporter.

Corn prices first spiked last month after the United States Department of Agriculture cut its forecast for corn stockpiles by 9%.

A drop in corn production in Argentina, the world’s second largest exporter, and a delay in planting a second crop in Brazil is expected to exacerbate the problem, Rabobank said.

The bank added that demand for an extra 2.5 million tonnes of corn by ethanol producers will further pressure stocks, with total global production expected to fall 7% from last year to 52 million tonnes this year.
This month, the United Nations Food and Agriculture Organisation’s Cereal Price Index hit its highest level since July 2008, though it was still 11% below its peak in April that year.

Spiralling cereal prices have been compounded by a severe drought in China and a rise in import demand from countries such as Algeria, where two people were killed in riots over unemployment and surging food prices last month.

(Source: http://www.efinancialnews.com/story/2011-02-14/corn-prices-rise-record-high?mod=sectionheadlines-PE-TT)