Corn, soy prices jump; corn reaches 12-year high as oil crosses $100 barrier on Nigerian violence

The March contract for corn rose to a 12-year high of $4.62 per bushel, while soybean jumped to $12.48 per bushel. The rises were attributed to the rise in oil prices to over $100 per barrel, blamed in turn on disruptions in Nigeria due to violence.

Goldman Sachs predicted earlier this week that, in 2008, soybean prices will reach $14.50 per bushel and corn will increase to $5.30 per bushel by December 2008, and recommended that its clients buy corn and sell wheat.

Christopher Wyke, product manager at Schroders, told Bloomberg that “prices are historically cheap” and that the rally in agriculture could last for 20 years. When adjusted for inflation, corn costs $2 per bushel compared to $7.80 in 1974.

Rising soy prices have been responsible for a widespread biodiesel slowdown in the United States. At least six biodiesel plants have shut down due to high feedstock prices in recent months.
In Iowa, the Freedom Fuels biodiesel plant in Mason City has shut down production last month. The plant has a capacity of 30 Mgy of biodiesel, and hoped to resume production in November. Four people were laid off from their jobs as a result of the shut down. Rising soybean prices have shuttered two Texas biodiesel plants, and are forcing producers to seek alternative feedstocks. Grainnet.com reported in September on two plant shutdowns in Pennsylvania, where state production has dropped to 5% of capacity. In Oklahoma, Green Country Biodiesel in Chelsea filed for liquidation last fall after Cargill cut off soybean oil deliveries after the company fell behind on payments.

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