March 28, 2024

Corn Prices Fall Sharply After a Larger-Than-Expected Estimate of Crop

The nation’s farmers have planted the second-largest corn crop in nearly seven decades, the Agriculture Department reported Thursday, setting off a sharp decline in prices.

The size of this year’s corn crop will be 92.3 million acres, the department said, 9 percent more than the average annual corn crop over the last decade. The only crop bigger in the last 67 years was planted in 2007.

Many analysts had worried that wet weather this spring would cut the number of corn acres. But high prices encouraged farmers to use more acres for corn, and less for soybeans and wheat.

A larger crop estimate drove corn futures 30 cents lower, to nearly $6.21 per bushel. That is the maximum price change allowed by futures exchanges. Corn rose to a high of $7.99 per bushel in June.

More expensive grain has led to food price increases this year. That could ultimately make everything from beef to cereal to soft drinks more expensive at the supermarket. For all of 2011, the department predicts food prices will rise 3 to 4 percent.

A huge harvest in August could ultimately slow food inflation. It typically takes six months for changes in commodity prices to affect retail food prices in the United States. Analysts said consumers could see some relief at the supermarket by early 2012.

“All of us who perceived tighter supplies up to this point, all of us were proven wrong today,” said Jason Ward, an analyst with Northstar Commodity in Minneapolis.

Industry traders had expected 90.8 million acres of corn to be planted. Knowing that far more corn is in the pipeline will likely pull grain prices down significantly this summer, Mr. Ward said.

Farmers chose to plant corn at the expense of this year’s soybean crop. They planted 75.2 million acres of soybeans, about 3 percent less than last year.

Farmers have a limited supply of good farmland and usually trade one crop for another on their acreage.

“It seemed to me there was $100 to $150 per acre more money in the corn than there was in the beans,” said Tom Kreutzer, who planted 150 acres of corn on his farm near Wakeeney, Kan. “That’s the kind of math that a lot of guys were using.”

A separate report from the Agriculture Department on Thursday estimated the United States had 3.67 billion bushels of corn in storage. Most analysts were expecting a reserve of 3.3 billion bushels, said John Sanow, an analyst with Telvent in Omaha. If the reserve estimate is accurate, it means backup supplies could be higher this year and next. That would ease fears of a shortage.

Still, in August corn reserves are expected to hit their lowest level since 1995, according to the most recent department estimate. Global demand from ethanol producers and livestock owners has risen faster than farmers’ production over the last decade.

Higher corn prices make soybeans and wheat more expensive because farmers plant less of them.

Raised expectations for this fall’s corn crop also helped lower soybean prices in trading on Thursday. Soybeans fell 29 cents to $12.94 a bushel.

A bigger crop doesn’t guarantee lower food prices. A drought or flood could limit the size of the harvested crop.

Mr. Ward said many of the acres planted this spring were on marginal land that would not yield much grain.

Corn is a key ingredient in feed for poultry and livestock, and a staple in many processed foods. When corn prices rise, food processors and grocers pass along the higher costs to the consumer.

Surging corn and soybean prices are showing up at the grocery store this year.

In May, a sirloin steak cost about 7 percent more than last year, according to the most recent available Bureau of Labor Statistics figures. The price of pork chops jumped 9 percent. The price of spaghetti and macaroni noodles, which often contain soybean meal and corn syrup, jumped 13 percent.

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Greek Government Struggles to Win Support for More Austerity

ATHENS — Despite pressure from lenders for Greece to show a unified front in solving its debt crisis, Prime Minister George Papandreou had little apparent success Tuesday in persuading his political rivals to back additional tax increases and spending cuts.

The Socialist government has sought to respond to charges of foot-dragging by its European partners by announcing new initiatives to raise revenue, in order to secure the next installment of emergency funding from the European Union and International Monetary Fund.

Late Monday, the government said that it would proceed “immediately” with the sale of stakes in the telecommunications operator O.T.E., the country’s main ports of Piraeus and Thessaloniki and the state-owned Hellenic Postbank. The Finance Ministry would not say how much it aimed to raise.

On Tuesday, Mr. Papandreou met with opposition leaders, trying to win support for a broader program of “additional measures,” amounting to €6 billion, or $8.45 billion, to reduce Greece’s budget deficit to 7.5 percent of gross domestic product this year — from 10.5 percent in 2010 — despite double-digit unemployment and a deepening recession.

The Finance Ministry refused to disclose details of the additional measures, saying that they would be final only after Mr. Papandreou’s talks with the opposition and discussions this week with visiting representatives of the E.U. and I.M.F.

They have, however, been the subject of feverish speculation in the Greek press. Among the measures under consideration, according to the reports, are an increase in the road tax; raising the value-added sale tax on certain goods and services that now enjoy a reduced rate; imposing taxes on natural gas and soft drinks; and abolishing additional tax breaks. The introduction of a tax on pensions above a certain level is also believed to be in the cards.

The ruling Socialists have a comfortable six-seat majority in the 300-seat Parliament and should be able to pass the measures without the support of the opposition. But Greece’s creditors have been pressing Mr. Papandreou to seek consensus for the deeply unpopular reforms before presenting them to a Greek public weary of a year of austerity, arguing that some degree of political consensus would make implementation easier.

The European Economic and Monetary Affairs Commissioner Olli Rehn last week held up the example of two other euro-zone countries with debt problems where some cross-party agreement had been reached on austerity packages. “It is possible for Portugal and Ireland, why not Greece?” Mr. Rehn said.

However, Antonis Samaras, the head of New Democracy, the main conservative opposition in Greece, has repeatedly dismissed the government’s proposed reforms as “demonstrably wrong.” Earlier this month, Mr. Samaras presented an alternative fiscal program that calls for lowering taxes but moving faster on privatization, including the sell-off of the country’s biggest electricity producer, P.P.C.

The government has yet to make a move on P.P.C.; the ruling Socialists traditionally have strong ties with its labor union.

After meeting the prime minister on Tuesday, Mr. Samaras said additional tax increases would “suffocate” the sluggish Greek economy.

“We will not back this erroneous economic program,” Mr. Samaras said. “What is needed is a creative shock through the reduction of taxes. We say yes to privatizations but no to measures of fiscal panic.”

The response from leaders of Greece’s leftist parties was even colder. The head of the Communist Party, Aleka Papariga, refused to meet the premier, saying their views were “diametrically opposed.” The leader of the radical left Syriza party, Alexis Tsipras, described the proposed reforms as “a crime against the Greek people” and called for Mr. Papandreou to step down.

As the prime minister continued his meetings, the government spokesman George Petalotis said the ruling party was only interested in “proposals that will reduce the deficit.” He added that the first wave of privatizations would be carried out “soon.”

Greek unions announced plans for another one-day protest strike next month.

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