Big US corn planting seen as corn futures climb past $5 per bushel

Corn futures at the Chicago Board of Trade have increased to $5 per bushel, prompting expectations of another big spring planting of corn. Last year, farmers planted record acreages of corn and produced a record 13.074 billion bushel corn crop. Despite the record production, reserve corn stocks only increased from 1.3 billion to 1.4 billion bushels, owning to strong ethanol producer demand as well as 2.45 billion bushels in export sales.

In  recent weeks, soybean stocks have plunged, creating conditions for further biodiesel feedstock price increases, but corn shortages eased in December according to the USDA. For December 2007 compared to December 2006, corn stocks were 10.3 billion bushels, up 15 percent. Soybean stocks were 2.33 billion bushels, down 14 percent, while wheat stocks fell 14 percent to 1.13 billion bushels.

Providing more background to the reserve stock shortages, the International Food Policy Research Institute recently released a report saying that the world is eating more food than it produces, and that biofuel production runs the risk of creating social unrest. The report projected a 66 percent increase in the price of corn and a 50 percent increase in oilseed prices by 2020, attributed to biofuel production. The report also said that global cereal stocks have fallen to their lowest levels in more than 15 years.

The International Grains Council said that it projected an increase in global wheat stocks in 2008-09 due to increased planting. Poor harvests in Australia, Ukraine and Canada resulted in significant shortfalls in production in the past year.