Corn Plays Catchup

While the values of other agriculture products have climbed in recent months, corn prices have sputtered. However, the combination of historically high wheat and soybean prices and a tumbling U.S. dollar has recently given corn new allure, particularly to investment funds and foreign buyers sensing a bargain.
Corn prices topped $4 a bushel in June on concerns over the ability of supply to sate rising demand, particularly from a growing ethanol industry. But prices slid when the government estimated farmers would plant the largest corn crop since the 1940s, and investors lost their appetite for the grain. Corn has wavered between about $3.20 to $3.50 a bushel ever since. Now the harvest is under way; the U.S. Department of Agriculture expects production to reach 13.3 billion bushels.

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Even though the country’s corn crop is expected to be huge this year, worldwide demand for corn to feed livestock and to make alternative fuels such as ethanol is increasing pressure on global supply.

Barclays Capital analysts point out in a report that although world corn production has swelled to peak levels, stockpiles remain at the lowest level in more than three decades.

Production of biofuels has risen around the world. China, in particular, has seen substantial growth in demand for corn for ethanol

Yahoo Finance