Relief in food prices may come as corn supply rises

The price of corn has risen to the point that it is prohibitive for an number of overseas buyers, which has plummeted its demand. This may drive the tightened corn supply upward, easing the price of food by the end of this year.

In fact, it is anticipated by the Agricultural Department that the exports of American corn will be slashed by 50 million bushels during the summer months. This may help in bringing the year-end surplus of corn to 730 million by the end of August, when the harvest of the crops will start. This would mean an increase of 8 percent over previous predictions.

Right now, even larger crops of corn are being planted, as the government predicts that its supply will grow to 900 million bushels by the year 2012.

Analyst Jason Ward at Minneapolis-based Northstar Commodity said that “The idea behind that is that prices are high enough to ration demand”. The price of corn started sliding last week as commodities contracts were sold from grains to metals and oil, counting on the belief that consumers will begin reducing their spending as a result of the higher prices.

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Posted by David Goldman on May 12 2011. Filed under Business. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.