corn prices rise again

Looks like the USDA isn't sure of what it is doing.

First there is too much corn, now there isn't enough. Corn prices are still at 3 year highs and heading back to $7. Currently they are around 6.60.

From Bloomberg.


"U.S. corn inventories before the 2012 harvest may rise less than analysts expected because of higher demand for ethanol, animal-feed and exports.

Reserves will reach 870 million bushels (22.1 million metric tons) by Aug. 31, 2012, down from 880 million projected for the end of this year, the U.S. Department of Agriculture said today in a report. The average estimate of 26 analysts surveyed by Bloomberg News was 1.029 billion. In June, the USDA forecast 695 million.

"Inventories are still pretty tight," said Marty Foreman, an economist for Doane Advisory Services Co. in St. Louis. "Now the focus will shift to the weather the next six weeks and final yields."

Corn futures for December delivery fell 4.25 cents, or 0.7 percent, to $6.3275 a bushel yesterday on the Chicago Board of Trade, after touching $6.3975, the highest price since 30. The most-active contract gained 60 percent in the past year as hot, dry weather cut production around the world and demand improved, reducing global supplies.

Smaller inventories may boost costs for companies including hog-processor Smithfield Foods Inc. and poultry- producer Tyson Foods Inc, which say corn-based feed is their biggest expense. Ethanol makers such as Archer Daniels Midland Co. also may pay more for raw materials.

Crop Forecast

U.S. production is projected at a record 13.47 billion bushels, up 2 percent from 13.2 billion forecast last month. Last year's crop was estimated at a 12.447 billion. Yields may be 158.7 bushels an acre, unchanged from last month's forecast and up from 152.8 bushels last year.

About 5.15 billion bushels will be used to make ethanol in the marketing year that begins Sept. 1, up 2 percent from an estimated 5.05 billion this year, the USDA said. Feed use is forecast at 5.05 billion bushels, compared with 5 billion estimated in June and 5 billion projected for this season.

Exports will rise to 1.9 billion bushels from 1.875 billion this year, according to the department. In June, the forecast for the next season was for 1.8 billion bushels.

Corn is the biggest U.S. crop, valued at a $66.7 billion in 2010, government figures show"