Corn rises to 2008 highs on decreased U.S. inventories

Corn futures reached their highest value in over two and a half years on speculation that inventories in the U.S., the world's biggest producer and exporter, will be lower than expected.Corn futures reached their highest value in over two and a half years on speculation that inventories in the U.S., the world's biggest producer and exporter, will be lower than expected.

The U.S. Department of Agriculture cut its estimate yesterday for 2010's domestic corn harvest and affirmed that inventories will drop to 5.5 percent of consumption - the lowest since 1996. Moreover, global demand for corn has surged since the latter part of 2010 as the global economic recovery took hold.The U.S. Department of Agriculture cut its estimate yesterday for 2010's domestic corn harvest and affirmed that inventories will drop to 5.5 percent of consumption - the lowest since 1996. Moreover, global demand for corn has surged since the latter part of 2010 as the global economic recovery took hold.

Sal Gilbertie, who runs the Teucrium Corn exchange-traded fund, told Fortune that market conditions have been driving corn upward for months: "We have been headed in the same direction since mid-summer, because demand is just not backing off. We are seeing a steady tightening of the balance sheet, which the market is going to have to deal with by price rationing."Sal Gilbertie, who runs the Teucrium Corn exchange-traded fund, told Fortune that market conditions have been driving corn upward for months: "We have been headed in the same direction since mid-summer, because demand is just not backing off. We are seeing a steady tightening of the balance sheet, which the market is going to have to deal with by price rationing."

Today on the Chicago Board of Trade, corn futures for March delivery rose by 1.6 percent, or 10.5 cents, to trade at $6.4159 a bushel. Earlier in trading, the price touched an intraday high of $6.445, the highest level for a most-active contract since July 18, 2008.Today on the Chicago Board of Trade, corn futures for March delivery rose by 1.6 percent, or 10.5 cents, to trade at $6.4159 a bushel. Earlier in trading, the price touched an intraday high of $6.445, the highest level for a most-active contract since July 18, 2008.

Corn futures are currently 45 percent above their year-ago levels; furthermore, the price is hovering about $1 below the early 2008 peak levels that prompted global food riots. Corn futures are currently 45 percent above their year-ago levels; furthermore, the price is hovering about $1 below the early 2008 peak levels that prompted global food riots.