About 40 percent of the crop is used to make ethanol. Corn futures have more than doubled in the past year to its highest levels since July 2008, as rising pork and beef prices encouraged demand from livestock producers and as U.S. export-sales expanded at the fastest pace in three years.
“Ethanol demand is strong, and rising cattle prices have been offsetting increased costs of feed,” said Shawn McCambridge, the senior grain analyst for Prudential Bache Commodities LLC. “At this point we haven’t seen a lot of evidence that prices are having a negative impact on demand.”
Goldman analysts Damien Courvalin and Jeffrey Currie said corn would rise to $8.60 in three months, compared with a previous forecast of $6.20, according to a report to clients April 1. The bank also raised its six-month outlook to $7.80 from $6 and its 12-month estimate to $7 from $5.80. Goldman advised consumers and investors to buy futures for December delivery traded in Chicago.
Global corn inventories probably will fall to 120.3 million metric tons, down 2.3 percent from last month’s USDA’s forecast, according to the Bloomberg survey.
To rebuild corn stockpiles, “we need the combination of a good crop and lower usage, and it’s going to be tough to get both,” said Christian Mayer, a market analyst at Northstar Commodity Investments Co. in Minneapolis.