Javier Blas reported yesterday at The Financial Times Online that, “Corn prices surged this month to an all-time high of $8.4375 a bushel on the back of the worst drought in the US in nearly half a century. But prices have since fallen roughly 5 per cent. The impression is the rally has run out of steam.
“This is far from the real picture. Prices need to rise again – probably setting all-time highs – to dampen consumption that is running ahead of supply. If demand does not slow down, silos will be all but empty before the next harvest arrives in late 2013.
“On paper, the balance sheet for corn supply and demand published by the US Department of Agriculture seems good enough. But in practice, the numbers look a bit shaky. The agency, whose figures are closely watched by the market, first estimates supply and, after that, adjusts the demand data to maintain a minimum level of inventories. This time the USDA is asking for monumental rationing on the demand side. For example, US corn feed and export demand will need to drop to their lowest levels in nearly 20 years.”