News last update:6 Aug 2012

Rain pushes corn to another record high

Corn futures extended their climb, rising to a record for a third straight session this week as heavy rains flooded fields and battered crops in Midwestern states.

Farmers are worried that excessive rain in the US Corn Belt will damage recently planted crops and hurt yields, adding to the food inflation that has driven up the price of everything from eggs to meat to bread.

Last week's rain-fed jump in corn prices was the largest one-week rally in the contract's history.

Corn prices on Wednesday surged above $7 a bushel for the first time, pushed higher by Midwest rains that have flooded fields and left farmers with the prospect of a significantly smaller crop.

Corn prices are poised to go even higher, analysts say. Weekend showers dumped as much as 200 mm of rain over parts of Iowa, Illinois and Indiana, and forecasts predict more bad weather.

US farmers were expected to plant 86 million acres of corn this year, but wet weather in Midwestern states has left an estimated 4 million acres unplanted.

With the corn planting season already over, farmers will either leave them empty and take insurance payments or switch the acres over to soybeans, which have a later growing cycle.

Corn's jump — its fifth record in as many days — means more headaches for consumers, who can expect higher beef, pork and chicken prices as livestock owners are forced to thin their herds and flocks to cope with higher costs for corn-based animal feed.

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