US corn futures hit by bumper planting
By Gregory Meyer in New York and James Politi in Washington
Corn futures have suffered their steepest fall in 15 years after record prices prompted US farmers to defy wet spring weather to plant a sharply increased acreage of the grain.
The decline in the corn (maize) price – if it persists – could help support the Federal Reserve’s view that the recently seen higher US inflation could be transitory.
Lower food prices could also bode well for the US economic outlook. In its June statement, the Federal Open Market Committee, which sets interest rates, cited “higher food prices” and their damping effect on consumer spending as one of the conditions restraining the economy.
Three weeks ago corn was less than a penny short of $8 per bushel, an all-time high, and analysts warned that prices would need to stay high to keep critically low stocks from running out before harvest time.
But the US Department of Agriculture said on Thursday that farmers in fertile states such as Iowa, Minnesota and Nebraska had sown unexpectedly large amounts of corn. At 92.3m acres, US plantings were the second biggest since the second world war and came in spite of soggy fields and damaging floods. The US is the largest corn producer and exporter.
“Everything we’d been staring at said [farmers] just couldn’t get out in the field,” said Chad Hart, agricultural economist at Iowa State University. “Well, evidently they did.”
High prices have also begun to cut into corn consumption as meat producers shift to other feeds. In the three months to June 1 implied demand fell 15.7 per cent from the same period last year.
Corn has led major food commodities higher, rising 77 per cent in the past year as demand from US, China and other big consumers threatened to run down supplies.
Corn futures have suffered their steepest fall in 15 years after record prices prompted US farmers to defy wet spring weather to plant a sharply increased acreage of the grain.
The decline in the corn (maize) price – if it persists – could help support the Federal Reserve’s view that the recently seen higher US inflation could be transitory.
Lower food prices could also bode well for the US economic outlook. In its June statement, the Federal Open Market Committee, which sets interest rates, cited “higher food prices” and their damping effect on consumer spending as one of the conditions restraining the economy.
Three weeks ago corn was less than a penny short of $8 per bushel, an all-time high, and analysts warned that prices would need to stay high to keep critically low stocks from running out before harvest time.
But the US Department of Agriculture said on Thursday that farmers in fertile states such as Iowa, Minnesota and Nebraska had sown unexpectedly large amounts of corn. At 92.3m acres, US plantings were the second biggest since the second world war and came in spite of soggy fields and damaging floods. The US is the largest corn producer and exporter.
“Everything we’d been staring at said [farmers] just couldn’t get out in the field,” said Chad Hart, agricultural economist at Iowa State University. “Well, evidently they did.”
High prices have also begun to cut into corn consumption as meat producers shift to other feeds. In the three months to June 1 implied demand fell 15.7 per cent from the same period last year.
Corn has led major food commodities higher, rising 77 per cent in the past year as demand from US, China and other big consumers threatened to run down supplies.
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