Corn prices to remain at $6-7/bushel - Citigroup

16 June 2008 15:58  [Source: ICIS news]

HOUSTON (ICIS news)--Corn prices will likely remain at $6-7/bushel through the first half of next year, a Citigroup research note said on Monday.

Citigroup released the note in response to the floods that hit Iowa, a state that lies in the nation's corn belt. The floods have damaged thousands of acres of corn, causing prices of the grain to soar.

"We don't envision crop prices declining," the note said.

Farmers will likely shift production to corn, causing demand to increase for certain fertilizers, the note said.

However, ethanol has become much less profitable, and the industry could reduce capacity, according to the research note. Corn is the number-one feedstock for ethanol in the US.

Moreover, the nation is considering halting its Renewable Fuel Standard (RFS), the note said.

The new standard mandates a four-fold increase in US biofuels production and consumption to 36bn gal (136bn litres)/year.

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By: Al Greenwood
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