Corn shortage? Grain, ethanol prices surge on supply worries
In Washington, the USDA lowered its forecast for the 2010-2011 global corn crop to 814.26 million metric tons, a drop of nearly 2 million tonnes from the last forecast in January.
The crop declines are being attributed to poor weather conditions in Argentina, still compares favorably to the world record harvest of 812.34 million tonnes for the 2009-10 harvest, but with livestock and ethanol demand expected to rise, the USDA has lowered its forecast for ending corn stocks to 675 million bushels.
Low stocks trigger rising corn prices, which accordingly have jumped to $6.98 per bushel, up nearly 25 cents on the news. Ethanol future have jumped to $2.555 on the West Coast and in New York, and $2.457 at the Chicago Board of Trade. Even with these prices, analysts estimate that ethanol produced from corn purchased on the spot market would be now produced at a significant loss.
Category: Fuels
