This year’s corn crop is being planted much later than normal because of cool, wet weather in the Corn Belt and other production areas, according to a Reuter’s story today. The slow planting has caused a jump in corn futures:
Corn futures at the Chicago Board of Trade surged as much as 4 percent on Tuesday, with an all-time high of $6.60-3/4 a bushel set by the July 2009 contract.
According to the U.S. Department of Agriculture’s weekly agriculture summary, the pace of planting is significantly slower this year:
Corn: Twenty-seven percent of the Nation’s corn crop was planted by week’s end, 18 and 32 points behind last year and the 5-year average, respectively. In the central Corn Belt, Ohio Valley, Tennessee Valley, and central Great Plains, producers gained momentum and were able to plant 20 percent or more of their crop between rain showers, but remained well behind normal in most areas. Elsewhere, farmers planted at a slower pace, awaiting warm, dry conditions to resume fieldwork. Progress was the farthest behind normal from Missouri and Illinois northward.
If lower crop production occurs, higher prices could add to rising food costs.
And, of course, the increased use of corn for biofuels has exacerbated the rise. As the USDA noted in a May 2008 report:
The data suggest that while U.S. corn used for ethanol production had only a small effect on global markets in the 1980s and 1990s, the increase in U.S. ethanol production over the past 5 years and the related significant changes in the structure of the U.S. corn market have had a more pronounced impact on the world’s supply and demand balance for total coarse grains recently. Importantly, since the United States is the world’s largest corn exporter, some of the higher prices resulting from increased U.S. demand has spilled over onto world markets.