Corn: Low Yields, High Prices

FOR CORN FARMERS AND FUTURES traders, the "new normal" might already be old news.

As recently as late spring, analysts were saying the long-term outlook was for prices of $3 to $4 a bushel. That would be roughly 50% below the record highs set in 2008, but above the $2 to $3 that was the historical average before the latest boom in ethanol use.

Since then, a historic Russian heat wave has sparked concern about global grain supplies, and U.S. farmers have reported disappointing yields. Investors are increasingly taking notice, and corn futures have surged 58% since late June. They finished Friday at $5.1325 a bushel on the Chicago Board of Trade. While a short-term correction is likely, ultimately bulls could have enough ammo to keep bears at bay for months to come...read more