Driven by frenzied trading on the Chicago Board of Trade, US corn prices rose by 8.5 percent on Friday, the largest one-day increase since 1973.
Over a two-day period, corn increased by more than 15 percent before easing slightly to 12.7 percent, a two-year high. Wheat, soybeans and other basic agricultural products have also soared, threatening a global food crisis like that of 2007-08.
The US Department of Agriculture (USDA) on Friday revised its projection for US corn crop yields downward by 4 percent and predicted a “much tighter supply picture” for the food production industry. Citing high temperatures across the Central Plains and flooding in Minnesota, the USDA lowered projected yields to 12.7 bushels, down half a billion bushels from 2009. Last year’s harvest was a record 13.1 billion bushels. The USDA also estimated that its reserve corn stocks will fall to a 14-year low this winter.
Commenting to the Financial Times October 11, Lewis Hagedorn, an agricultural commodities analyst for JPMorgan Chase, said, “The market is going to try to ration demand wherever possible.”
The weakening dollar has led to rising speculation in the commodities markets, pushing up prices and increasing volatility, with investors attempting to hedge against currency devaluation and inflation resulting from an expected return by the Federal Reserve to a policy of “quantitative easing.” The Reuters-Jefferies CRB index, the benchmark index of raw materials including agricultural commodities and metals, rose to its highest level in two years on Friday. Buyers outnumbered sellers on the Chicago Board of Trade (CBOT) floor last week by a ratio of 31 to 1...
http://www.wsws.org/articles/2010/oct2010/corn-o13.shtml