11 April 2008 19:13 [Source: ICIS news]
HOUSTON (ICIS news)--US corn prices will likely hit $7/bushel this year, far surpassing government projections that put 2008 corn prices in the low $4/bushel, a US ethanol producer said on Friday.
The US Department of Agriculture (USDA) increased on 9 April its forecast for US corn prices in 2008 to $4.10-4.50/bushel. That compares with $3.75-4.25/bushel as projected by USDA in March.
“We would love be able to buy corn at that price,” the producer said.
Prompt corn futures in Chicago traded at $5.88/bushel early on Friday, down from $5.98/bushel a week earlier, but up from $4.73/bushel on 2 January.
Corn futures were below $4.00/bushel a year ago and were below $2.50 in early 2006.
The rally in corn, which has significantly squeezed US ethanol margins, is largely attributed to the inflow of speculative capital in commodity markets.
Bad weather in the US midwest, a factor that could potentially delay corn seeding, and projections that the US corn crop will drop by 8% in 2008 have also pushed corn prices up, according to sources.
For more on ethanol visit ICIS chemical intelligenceBookmark Simon Robinson’s Big Biofuels Blog for some independent thinking on biofuels
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