Blame it on the rain!
June 10, 2008 by Tisa Silver
Filed under Finance
Corn prices have risen ten percent since last Tuesday!
Are the farmers trying to compete with oil traders and speculators? Not so, the cause of the recent corn run-up is much easier to identify. Torrential rain in the country’s Corn Belt is to blame for slowed planting and crop development.
The heavy rains caused the USDA to revise its May estimate for the 2009 crop season downward by three percent. The revision places year-end stocks at their lowest level in 13 years. Markets quickly digested the news of diminishing supplies and sent corn prices up for the fifth straight day.
This kind of basic shift in prices due to a shift in demand is so easy to grasp, it makes the recent oil price swings that much more frustrating! Oil is limited, the world consumes a lot…understood. But, what kind of supply concern or shock is large enough to warrant such volatility on a daily basis?
