A robust global economy, rising meat consumption, a weak dollar and high energy costs are expected to keep US grain prices, already at multiyear highs, strong in 2008 and onwards, analysts said. Whether the La Nina weather phenomenon affects crops in the United States and South America next year adds a measure of uncertainty over grain prices, the analysts said.
"For farmers, it's a golden age of agriculture. For the first time in history, the world economy is outgrowing the US economy," Steve Freed, vice president and analyst for ADM Investor Services told a conference late on Monday.
"With the global economy remaining strong, grain prices look to remain firm in the near future as weakness of the dollar continues," he said. Freed said the Chicago Board of Trade (CBOT) soyabean futures market could challenge or exceed the record high of $12.90 per bushel set over 34 years ago in the summer of 1973 if La Nina brings dry weather to South America. "It's a La Nina year so there is a better chance for dry weather in Argentina and southern Brazil and for dry weather in the US Plains and Midwest," Freed said.
Soaring demand continues for grains to meet the expanding requirements for food and fuel. On Tuesday, the US Department of Agriculture said in the 2007/08 season ending August 31, US corn exports would be a record high 2.450 billion bushels, above the previous record 2.402 billion set some 20 years ago.
The USDA also cut its forecast for the ending supply of wheat to a near 60-year low and trimmed its outlook for corn and soybean ending stocks for the current (2007/08) crop marketing year, touching off another price rally for each on the Chicago Board of Trade futures markets. Mark Ditsch, an analyst for Chicago trade house LaSalle Group told the National Grain and Feed Association conference that there had been a surge in demand for commodities over the past two years.
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