Corn prices stabilize after reaching two-year peak

By Caroline Scott-Thomas

- Last updated on GMT

Related tags: Agriculture, Usda

Corn prices stabilized overnight after their biggest rise since 1973 on Monday, following a government downgrade of harvest forecasts at the end of last week.

The soft commodity’s price jumped by as much as 8.5 percent on the Chicago Board of Trade (CBOT) on Monday to $5.73 a bushel, triggering a limit that halted trading.

The US Department of Agriculture (USDA) cut its forecast for the US corn harvest by the largest amount in decades on Friday, sparking fears of a repeat of the food price crisis of 2007-2008. But corn for December delivery ended the overnight session at $5.56 a bushel – still far lower than the $7.20 peak of 2008.

The United States is the world’s largest exporter of corn but farmers have been hit by bad weather this season. The corn harvest is still expected to be the third largest on record, but carry-out stocks are likely to fall sharply, USDA said.

The rise in corn prices, which settled at $5.5575 a bushel on Monday, – up 5.2 percent – has impacted other crops; wheat and soybeans also hit their trading limits, and high grain prices could have a knock-on effect for meat prices, as corn is a major feed crop. Livestock futures prices also rose on the news.

CBOT corn futures prices broke the $5 barrier just last month for the first time since September 2008, as farmers reported a disappointing start to their harvests across the Corn Belt.

“Corn production is forecast 496 million bushels lower as a 258,000-acre increase in harvested area is more than offset by a 6.7-bushel-per-acre reduction in yield,”​ the USDA reported in its World Agricultural Supply and Demand Estimates report, released on Friday.

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