Corn prices plunge “limit down”

After reporting on prices at multi-decade highs for foodstuffs like tea, cocoa, and sugar and soaring prices for oranges due to the Florida freeze, we finally have a food commodity plunging in price. Today, corn prices plunged 7.1% a bushel (30 cents) which is “limit down”, meaning the maximum allowed price drop on the exchange. The catalyst was the United States Department of Agriculture (USDA) reporting record corn production:

“U.S. feed grain ending stocks for 2009/10 are raised based on higher estimated corn and sorghum production. Corn production is estimated at a record 13.2 billion bushels, up 230 million bushels with higher area and yields. Corn feed and residual is projected
150 million bushels higher based on September-November
disappearance as indicated by the December 1 stocks. Partly offsetting is a 10-million-bushel reduction in food, seed, and industrial use reflecting lower-than-expected September-November shipments of high fructose corn syrup. Corn ending stocks are projected at 1,764 million bushels, up 89 million bushels and the largest since 2005/06. However, because of higher usage, stocks as a percentage of use are down year-to-year at 13.5 percent compared with 13.9 percent for 2008/09.”

In related news, soybeans set another production record while the wheat crop is likely the smallest since 1991.”

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