Corn Futures Surge on Lower Forecast – WSJ.com

Agricultural , Commodities , Food Feb 09, 2011 No Comments

Federal forecasters predict U.S. corn supplies will hit lows not seen in 15 years as record ethanol production raised new concerns about whether farmers can keep pace with demand for grain.

The U.S. Department of Agriculture cut its estimate of how much corn would be in U.S. stockpiles at the end of August by 9% to 675 million bushels. This bigger-than-expected reduction sent futures soaring to more than 2½ -year highs Wednesday.

“The USDA’s estimate suggests a level considered bare minimum pipeline supply at the end of the season,” said Alex Bos, an analyst with Macquarie Commodities Research.

The USDA in its monthly crop report mostly left its wheat and soybean estimates unchanged from its forecast in January, yet futures contracts for those commodities also climbed on concerns that less corn in the U.S. would cause global grain supplies to further dwindle.

Prices of agricultural commodities have boomed since last summer, reaching their highest levels since a record-setting rally in 2008. Food prices have followed, with the United Nations Food and Agriculture Organization food-price index hitting a record high in January.

via Corn Futures Surge on Lower Forecast – WSJ.com.

Rod Sherkin

Rod is a former senior executive, responsible for Purchasing, for both Pillsbury and Ball Packaging back in the 80’s and 90’s. Since then, he has continued to work in the Purchasing field as both a consultant and founder of the website Propurchaser.com.