Corn futures continued to rise on Monday, October 11, driven by fears that falling U.S. crop yields will put pressure on global supplies of the grain.
Corn for December 2010 delivery gained 37 and 3/4 cents to trade at $5.66 per bushel on the Globex electronic trading system, while March 2011 corn rose 38 cents to $5.75 and 1/2 per bushel.
The surging price of corn could have a substantial impact on the meat industry, which would see rising costs for feed. Another concern is the production and use of bioethanol, particularly in the United States.
"Meaningfully higher prices are now required in order to ration demand, principally ethanol consumption," Lewis Hagedorn, an agricultural commodities analyst at JPMorgan Chase in New York, told the Financial Times.
The surge in the corn market reflects nervousness about a report from the U.S. Department of Agriculture which was released on Friday. The USDA cut its estimate for the 2010-2011 crop year harvest by about 4 percent to 12.7 billion bushels. Wheat and soybean yield estimates also fell.
As corn rises towards $6 per bushel, more and more people are concerned about the possibility of a food crisis like the one that wracked the developing world in 2007-2008.
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