Corn price hits new high as US rain continues

Peter Stiff and agencies, Times Online 17 Jun 08;

Corn prices rose to an all-time high today as flooding in the US, the world’s biggest exporter of the grain, hit crops, fuelling concerns over the rising cost of food.

The surge in corn prices, which broke the $8-a-bushel barrier for the first time, came as heavy rains in the Midwest damaged crops and delayed planting, heightening fears that there will be insufficient corn to meet global demand for food, feed and biofuels.

The July 2009 delivery price of a bushel of corn surged to $8.07, the highest price for a corn contract and a new record for the eighth trading day in a row. The July 2008 corn contract rose to a record $7.57, with the price of soybeans also going higher.

Analysts said that, if rain in the region continues, further problems for corn crops would be impossible to avoid and that traders would continue to buy, pushing up the price.

Short supply and strong demand has caused prices to jump by a quarter since the start of the month, increasing financial pressure on livestock breeders, exporters and ethanol and biodiesel makers. In the past year, the price of corn has risen 85 per cent, on record demand for biofuels and livestock feed as people in a more affluent Asia eat more meat.

Last week, the US Department of Agriculture warned that corn stockpiles may fall 53 per cent to a 13-year low before next year’s harvest, largely because of bad weather hitting crops.

Flooding in the Midwest has been described as the worst since 1993, with the US National Weather Service predicting millions of dollars worth of damage.

More thunderstorms are expected this week, adding to farmers’ woes, whose fields were soaked by 12 inches of rain last week; some have suffered five times the normal amount of moisture since the end of May.