Why $9 Corn Could Be a Big Problem for the Economy

Corn prices — which have already surged about 50 percent in the past two months — could go significantly higher if current trends hold up, and the effects might be felt throughout the economy.

Price momentum indicates corn [CCV1 816.50 16.00 (+2%) ] could rise at least 21 percent over the next six months, putting $9.50 a bushel or even higher into play, according to a model used by the American Restaurant Association.

"It's not infallible but it suggests that there's definitely upside risk here in this market," said David Maloni, president and founder of the ARA Group. "It's alarming, that's why we look at it. We would not be surprised to some type of blow-off occur in corn and soybeans in the coming weeks."

Corn prices hit their lowest point in nearly two years in mid-June but have spiked violently as drought conditions have worsened across the country.

Read Full Article from CNBC

- Posted: 2012-08-08 16:14:41

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