Speculate on This
Are commodities traders overreacting to the current floods in the Midwest?
After all the speculation about ethanol, it wouldn’t come as a surprise.
It’s worth noting that corn is a global crop. The weather has been bad in the U.S., but favorable conditions in the EU and China, and the prospect of more planting in Argentina are bolstering world corn production, according to the International Grains Council.
In fact, the USDA’s Foreign Agricultural Service estimated on June 10 that the world would produce 775.3 million metric tons of corn in 2008/2009. That estimate was down just 0.3 percent from the May projection of 779.5 million metric tons.
Speculators might be wise to take a breath.
Sources:
International Grains Council. “Grain Market Report.” May 30, 2008.
U.S. Department of Agriculture, Foreign Agriculture Service. “World Corn Production, Consumption, and Stocks.” June 10, 2008.
