Perhaps the bigger news was the 17% drop in corn stockpiles. Stocks were at their lowest point in nine years as a result of the drought in corn-producing parts of the country. Corn consumption is forecast to rise through the end of the 2012-2013 crop year on demand for the grain to use as cattle feed. Corn exports are not expected to rise this year.
Cash corn prices are expected to average $7.40 a bushel in the current year, the same level as last month’s report, but up more than $1 a bushel compared with a year ago.
Higher costs will hit food producers like cereal makers General Mills Inc. (NYSE: GIS), poultry and hog producers like Smithfield Foods Inc. (NYSE: SFD) and Sanderson Farms Inc. (NASDAQ: SAFM), and ethanol producers like Archer Daniels Midland Co. (NYSE: ADM).
Corn prices spiked to nearly $7.10 a bushel after the report was released.
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