Corn prices surged to a two- year high Monday on concern that global demand for livestock feed, food and fuel made from the grain will outpace falling production in the U.S., the world’s biggest grower.
U.S. output will fall 3.4 percent from a year earlier, reducing reserve inventories before the 2011 harvest to the lowest level since 1997, the Department of Agriculture said Friday. Yields were cut by 6.7 bushels an acre to 155.8 bushels from a month earlier. Last week, prices jumped 13 percent, the most since December 2008.
“Traders are expecting further cuts in the U.S. crop,” based on historical revisions, said Greg Grow, the director of agribusiness for Archer Financial Services Inc. in Chicago. “The cut in U.S. production shocked the trade, and prices will now rise to find a price that slows demand.”
Corn futures for December delivery climbed 27.5 cents, or 5.2 percent, to close at $5.5575 a bushel on the Chicago Board of Trade. Earlier, the price jumped 45 cents, the most allowed by the exchange, to $5.7325, the highest level for a most-active contract since Sept. 24, 2008.
The USDA also cut its yield forecast last month. The last time output per acre fell in September and October was in 2000, when the final government estimate was 2.7 bushels smaller than the October projection.
Corn is the biggest U.S. crop, valued at $48.6 billion in 2009, followed by soybeans at $31.8 billion, government figures show.
