Ethanol use sends price of corn to 11-year high

Farmers are getting the best prices for corn in more than a decade amid strong demand for ethanol and feed, the U.S. Department of Agriculture reported Monday.

Average corn prices for the year were forecast at $2.90 to $3.30 a bushel, up 10 cents from last month’s estimate, according to the monthly crop report.

“We think about 50% of the corn crop has been marketed this year at an average price of about $2.70 a bushel,” said Keith Collins, the USDA’s chief economist. “As we look for the other 50% to be marketed, we think it could probably average about $3.50 a bushel.”

The last time prices were as high was 1995, when the average was $3.24 a bushel. This year is the fifth time corn prices have risen above $3 a bushel. Last year’s average was $2 a bushel.

The production forecast was unchanged at 10.7 billion bushels of corn, down from last year’s 11.1 billion bushels.

The nation’s ethanol fuel plants are expected to use about 20% of the corn crop, and exports should consume roughly the same share.

Analysts also left the forecast unchanged for soybean production, predicting 3.2 billion bushels, up from about 3 billion bushels last year.

The price forecast for soybeans rose to $5.70 to $6.50 a bushel, up from last month’s estimate of $5.40 to $6.40 a bushel. Last year’s price was $5.66 a bushel. Roughly 35% of the crop is expected to be exported to foreign markets.

Export demand has softened for beef and poultry, the USDA said. Analysts lowered the export forecast for beef amid problems with shipments to South Korea and for chicken amid slower-than-expected sales.

Also in the crop report:

Ӣ The wheat price forecast dropped 10 cents to $4.15 to $4.45 a bushel. Production was unchanged at an estimated 1.8 billion bushels.

Ӣ The rice price forecast rose to $9.55 to $9.95 a bushel, up from $9 to $9.50 per million hundredweight. Production was unchanged at 193.3 million hundredweight.

”¢ Analysts raised the orange forecast 3% from last month’s estimate to 8.12 million tons. That’s still down 9% from last season’s hurricane-ravaged harvest.