Three consecutive years of smaller U.S. corn harvests are driving inventories of the world’s most-consumed grain to a 39-year low and spurring Goldman Sachs Group Inc. to predict that prices will rise near record highs. Global stockpiles will drop 11 percent to 117.61 million metric tons by Oct. 1, or 13.6 percent of what will be used for food, ethanol and livestock feed, the lowest ratio since 1974, the USDA said in a recent report.
Prices surged 43 percent since mid-June as U.S. farmers endured their worst drought in 56 years, and heat waves and dry weather seared crops from Australia to Europe.While futures fell 14 percent since reaching a record $8.49 a bushel on Aug. 10, tightening supply before next year’s harvest will drive prices to an average of $8.25 in the next six months, 14 percent higher than today, Goldman said in a Dec. 5 report.
“It will take more than one year of good weather and high yields to dig the world out of this supply hole,” said Peter Meyer, a senior director of agriculture commodities at PIRA Energy Group in New York.
“While corn prices may not spike, they will remain well supported until the extreme moisture deficits in the U.S. are rectified.” PD
—From Bloomberg Businessweek (Click here to read the full article.)
