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Corn prices set to explode

The price of corn could be set for even more rises if information from the US Grain Council proves correct.

The Council, which supports the US grain export trade, claims that demand from China is set to go through the roof this year to meet a shortfall in stocks. It claims that the country is short by between 10 and 15 million tonnes, and will need to buy in significant amount of the grain.

"We learned the government normally keeps stocks at 30% but they are currently a little over 5%, which may lead to imports of 3-9 million tonnes (118-354 million bushels)," said Terry Vinduska, USGC chairman and board member for Kansas Corn Commission.

The imports would be a massive increase on the 1.3 million tonnes it bought during 2010-11 and would put a significant strain on global corn markets, although Chinese intentions are not yet known. While, it would seem natural for China to ramp up imports of corn it could also decide to hold back considering its current high price.

"If true, it means that the corn market is a lot tighter than even the most bullish traders imagine," reported the Financial Times.