Not to be outdone by surging wheat and soy prices, now corn too has entered the race. The Economist (14 October 2010) reports:
"The relentless summer sun (after earlier floods) led to the [October world supply-and-demand estimates from the United States Department of Agriculture (USDA)] report’s conclusion: 'Corn production is forecast 496m bushels lower as a 258,000-acre increase in harvested area is more than offset by a 6.7-bushel-per-acre reduction in yield.'
"...On October 8th, the day of the report’s publication, news that America’s production of corn (elsewhere known as maize) would be 4% lower in 2010 than previously estimated sent prices surging by 6%, enough to stop trading on the Chicago Board of Trade. Corn triggered limits again on October 11th after rocketing by 8.5%, the biggest one-day rise in 37 years. By mid-week, corn was changing hands for $5.88 a bushel.
"There are two reasons for this dramatic response. First, the news from the USDA was unexpected....The second is the importance of America for a crop eaten by people and livestock and also used to produce ethanol for fuel. The country harvests two-fifths of the world’s corn and provides nearly 60% of global exports. Even a small revision in forecasts corresponds to a huge volume of corn.
"...[But] The doom-mongering is premature. This year’s harvest will be the third-largest yet seen, and although stocks will run down, supplies are adequate for the 2010-11 season. Still, as Abdolreza Abbassian of the UN Food and Agriculture Organisation says, such talk can add to the upward price momentum."