08:47, June 17, 2008
Corn advanced to a record, extending its rally to a ninth session, as floods damaged crops in the US, the world's largest producer and exporter, threatening global food supplies.
Corn rose as much as 3.5 percent, and soybeans, wheat and rice all gained. The flooding in the Midwest will probably cause "hundreds of millions of dollars" of damage, according to the National Weather Service. US corn stockpiles may fall 53 percent to a 13-year low before next year's harvest, the US Department of Agriculture said last Tuesday.
Record crude oil, wheat, rice and soybean prices this year have driven global inflation, forcing governments to increase interest rates as the world economy slows and raising costs at companies such as Kirin Holdings Co, Japan's largest beverage maker. Soaring food costs have spurred riots from Haiti to Egypt.
"Inflation pressures are building around the world," David Cohen, director of Asian economic forecasting at Action Economics in Singapore, said yesterday. "It is squeezing household budgets, especially the poorest, and company profits."
Corn gained as much as 3.5 percent to $7.9150 a bushel in Chicago and has advanced 33 percent in the past two weeks. It's up 85 percent in the past year on record demand for biofuels and livestock feed as rising Asian incomes increase meat consumption.
Spiraling food and fuel costs present a "serious" threat to the global economy, eclipsing the credit squeeze, finance ministers from the Group of Eight nations said in a statement released after a meeting held in Osaka, Japan on Saturday.
"Elevated commodity prices, especially of oil and food, pose a serious challenge to stable growth worldwide, have serious implications for the most vulnerable and may increase global inflationary pressure," the ministers said.
Consumer prices last month probably rose the most since 1997 in the UK and the fastest in 16 years in the euro area, while US producer prices are predicted to have gained 1 percent from April, according to economist forecasts.
The ministers met after the price of oil doubled in a year to an unprecedented $139.12 a barrel on June 6.
Corn for December delivery, after the harvest, traded up 2.2 percent at $7.8175 in after-hours trading at 11:33 am London time.
The grain for delivery from March to July 2009 rose above $8 for the first time on the Chicago Board of Trade.
United Nations Secretary-General Ban Ki-moon called this month for a 50 percent increase in food production by 2030, saying that failure to feed the world's growing population will spark civil unrest and starvation. A 60 percent increase in food prices since the beginning of 2007 has spurred riots in more than 30 countries.
Kirin posted its first quarterly loss in four years in the three months ended March 31 as it battled higher costs for aluminum cans and brewing malt, the company said April 30. It said raw material costs would rise 10.2 billion yen this year.
Wheat for July delivery advanced as much as 15.75 cents, or 1.8 percent, to $8.9775 a bushel and traded at $8.885 as of 11:36 am London time. Still, futures are down 34 percent from a record $13.495 on Feb. 27 as farmers increased seeding.
Rice for July delivery rose 50 cents, or 2.5 percent, to $20.80 per 100 pounds as of 11:32 am in London. Rice reached a record $25.07 on April 24 after some exporters curbed exports.