Corn prices climbed to the highest since July 2008 on speculation that U.S. inventories will tighten as demand increases for food, livestock feed and fuel.
U.S. corn stockpiles on March 1 dropped to the lowest for the date in four years, the Department of Agriculture said last week. The agency may cut its forecast this week for supplies held as of Aug. 31. The U.S. sold 101,600 metric tons to unknown destinations, the USDA said today. High fuel costs are boosting demand for grain-based ethanol, and feed demand is rising as cattle and hog prices climb.
“Meat is at all-time highs, so obviously feed usage isn’t likely to be rationed,” said
Frank Cholly Sr., a senior strategist at Lind-Waldock, a broker in Chicago. “The ethanol grind isn’t likely to slow down as long as they’re profitable, so corn prices have to go higher.”
Corn futures for May delivery rose 6.5 cents, or 0.9 percent, to settle at $7.6675 a bushel at 1:15 p.m. on the Chicago Board of Trade, the highest closing price on record for a contract closest to expiration. Earlier, the commodity reached $7.7075, the highest since July 3, 2008. Corn has more than doubled in the past year.
U.S. supplies on Aug. 31 may drop to 589 million bushels, less than the USDA’s March estimate of 675 million, according to the average estimate of 30 analysts in a Bloomberg News survey. The government will update its projection for domestic and global stockpiles on April 8. The U.S. is the world’s largest producer, exporter and user.
China, the second-biggest corn consumer, may need to buy 2 million to 3 million tons before Aug. 31 as economic growth boosts demand for livestock feed, the U.S. Grains
Council said today.