Summary: The price of corn has jumped 77% y-o-y to its highest level since 1996. Corn is also the leading commodity over the past three months, gaining 44%, and outpacing all-time highs in zinc and nickel. At $3.72 a bushel last week, corn is seen approaching $5, where demand should begin to slow. So far, this is the third largest harvest in U.S. history, but it is meeting insatiable demand from livestock and ethanol producers, not to mention a global grain shortage. In 2004 after a record harvest, corn prices fell 43% ten months later to $1.94 a bushel. Higher corn prices increase the production costs for companies such as Archer Daniels Midland, Coca-Cola Enterprises and Tyson Foods. Tyson was particularly hard hit, reporting a net quarterly loss of $56m, its third consecutive loss, with another likely in the current quarter.
Related links: Tyson Foods: Earnings Disappoint; Looks To Turn Animal Fat Into Fuel • Ethanol Stocks: Six Reasons To Be Cautious • Corn Euphoria: Is It Time to Take a Step Back? • Barron's: Corn Prices Will Fuel Deere & Co. Growth • Seeking Alpha's Ethanol stocks sector coverage.
Potentially impacted stocks and ETFs: Tyson Foods (TSN), Coca-Cola Enterprises (CCE), Corn Products International (CPO), The Pepsi Bottling Group (PBG), Deere & Company (DE), Caterpillar Inc. (CAT) • Ethanol stocks: Archer Daniels Midland (ADM), Aventine Renewable Energy Holdings (AVR), Green Plains Renewable Energy (GPRE), MGP Ingredients (MGPI), Pacific Ethanol (PEIX), VeraSun Energy (VSE) and Xethanol (XNL).
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