Corn prices jumped more than 8% on Monday to hit a two-year high. The price jump comes after the US Department of Agriculture gave out a warning last week of bad weather causing “dramatically” lower supplies; traders scrambled to buy up as a result.
Over the last two days, corn prices have risen by 15% which is one of the biggest price hikes in recent history. Many are fearing that this is a signal that the world is moving towards another food crisis.
Over the weekend, UN officials conceded that the supply and demand balance for corn was “fragile” but reassured that it was not at such a stage to see a repeat of the ’07-08 crisis.
Early trading on Monday in Chicago saw corn surge by 45 cents to $5.73 a bushel, which is the highest it has been since September of 2008. Normally the limit for daily expansion in Chicago is 30 cents, however at the end of last week the exchange decided to widen the limit after corn prices rose 30 cents during the last sessions of trade last week.
It is expected that corn prices will reach $6 per bushel, which is a price level comparable to the peak of the ’07-08 food crisis, which also saw other agricultural commodities surge to record highs.
Bad weather in the US’s corn-growing areas has forced the USDA to reevaluate its estimated for corn production this year to 900million bushels, which is the lowest levels in over 14 years.
