High corn cost fails to reduce demand

U.S. corn stockpiles shrank far more than expected this summer as near record-high prices have not significantly reduced demand. A recent USDA report reignited a rally in grain prices sending corn futures higher after a period of easing. The USDA's ending-stock figures showed that that the high corn prices during the quarter had failed to reduce demand as analysts expected, suggesting that prices may need to rise in the coming months for livestock feed and ethanol, according to Reuters. The report showed 988 million bushels of corn on hand. Trader’s attention now shifts to anticipation of the next report from USDA due Oct. 11. “We look for USDA to boost their 2011/2012 feed and residual estimate when they update supply and demand,” Foreman says. In addition, corn-based ethanol production will likely keep up the pressure on prices. “Corn for ethanol is running above the pace implied by current USDA forecasts,” Foreman says...more