Commodities: Price of corn at its lowest for 15 years

1st July 2011

According to a report in today's Financial Times (paywall) corn futures have suffered their steepest fall in 15 years.

Earlier in the year corn hit a record price which prompted US farmers to plant what the FT reports as a "a sharply increased acreage of the grain".

Last month, the Federal Open Market Committee, said "higher food prices" were one of the main restrains of the US the economy. The US is the largest corn producer and exporter.

The US Department of Agriculture said farmers in fertile states such as Iowa, Minnesota and Nebraska had sown unexpectedly large amounts of corn. 

The BBC News website reported that the price of other crops, including soybeans, also fell.

It added: "Corn futures, which were just under an all-time high of $8 (£5) a bushel at the start of June, finished 9.9% down at $6.29 on Thursday. At one point, the price was down almost 12%.

"Wheat futures ended 8.8% down, with soybeans 2.1% lower. The falls continued on Friday, with wheat futures down almost 2% in early Asia trading."

The price of grain, including corn, has fuelled other food prices including commodities such as wheat and rice.

There are expectation of a huge harvest next month which will slow food inflation.

Last month the World Bank was encouraging companies in developing countries to buy insurance in the derivatives markets against sudden changes in food prices, with a deal that should allow them to hedge $4bn worth of commodities.

More here:

The commodities bubble: explained.

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