Corn is just skyrocketing. New records almost every session now. The Dec 2008 contract is over $7.25 a bushel. The front contract is right at $7.00 This was from the Chicago Board of Trade this morning.
The report put ending stocks for 2008/09 at just 673 million bushels compared to 763 million bushels last month. The report's main feature, according to some traders, was a sharp reduction in yield to 148.9 bu/acre vs. the 153.9 posted last month. A downward revision of 5 bushels by the USDA is considered unusually large at this point in the growing season.
A couple of points. We are probably getting near where ethanol is a break even for the refiners. However, because of the large fixed cost they will most likely run at an operating loss for awhile and they probably are hedged to a degree.
Also if the hot weather in the south (Texas is smoking in June like I have not seen in years) and the northeast moves into the midwest in the next month. Watch out. We could be looking at the worst corn crop in over 15 years or greater.
Also this means more pressure on the short term for meats as the feed costs will increase the slaughter rate driving up supply in the short term and down supply in the long term. At some point I think it is almost inevitable to see an explosion in meat prices.