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Lower corn production could result in wild price swings

When will the commodity price volatility end?

It's not likely to die down soon, according to Drs. Mark Welch and John Robinson, Texas AgriLife Extension Service economists. Projected corn plantings in the latest U.S. Department of Agriculture planting survey indicate farmers intend to plant 7.6 million fewer acres of corn this year compared to 2007. At current yield estimates of 154.9 bushels per acre, total corn production in 2008-2009 will be 6.5 percent less than last year.

What does this mean? With low carryover stocks and ever increasing demand from the fuel, feed and food sectors, the stage is set for wild price swings, according to AgriLife Extension economists.

Markets will be sensitive and are likely to react strongly to weather events that affect yields, the influence of outside markets and other supply/demand fundamentals.

Source: Texas AgriLife Extension Service, U.S. Department of Agriculture.

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