Ethanol demand could spark new bull market for corn

Reuters
Tue Aug 12, 2008 1:36pm EDT
By Sam Nelson - Analysis

CHICAGO (Reuters) - The worst may be over for U.S. corn, the price of which has tumbled 36 percent from a record high six weeks ago, with some analysts expecting a bounce later this year as ethanol production continues to climb.

There are some expectations this year's crop could fall short of the forecast issued on Tuesday by the U.S. Agriculture Department, which said farmers could produce their second largest crop in history despite the worst floods in 15 years in the Midwest in June.

"The people I've spoken with, their views of the crop are certainly dramatically different than what these yields today say and what the conditions say ... they're much more cautious and much more conservative," Rich Feltes, director of research for MF Global, told a panel discussion on the USDA report.

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