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Could Corn Price Hit $11 Per Bushel?
USAgNet - 01/07/2011

Are corn prices on their way to $11 a bushel? It looks that way, comparing Chicago futures prices this time round with those 15 years ago when stocks last got this tight. According to AgriMoney.com, the similarity in the move in corn prices is startling, says Travis Carter, a consultant at US broker FCStone.

"The big moves have happened to the day when comparing the two years," he said - right down to yesterday's weakness in prices.

Indeed, overlaying the corn price graphs for the performance of March 1996 and March 2011, adjusted such that around $3 a bushel then equates to a little over $4.50 a bushel today, shows identical twins from mid-August onwards.

Both charts match on September, October and December rallies, with some weakness in November.

Assuming the trend continues, the chart implies this year's March lot hitting $7.50 a bushel before it expires, to keep pace with the little over $4 a bushel that Chicago's March 1996 contract achieved.

And even these figures are small beer compared with the peak that comparison of July lots implies.

In 1996, this contract topped $5.50 a bushel shortly before it expired, equivalent to nearly $11 when transposed to the graph for the July 2011 lot.

The first is that 1996 prices were also helped by a hefty January cut of 18% in the US Department of Agriculture's estimate for American inventories at the end of the crop year, as well as by a bullish report in March on farmers' planting intentions.

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