U.S. corn eyes new peaks, may add to food woes

By Sam Nelson - Analysis

CHICAGO (Reuters) - Record-high U.S. corn prices are on a bullish path that could heighten tensions over global food inflation woes and give further ammunition to critics of using grain to make the renewable fuel ethanol.

High food prices have sparked riots in several African countries, as well as Indonesia and the Philippines. The food situation toppled the government in Haiti last week when senators fired the prime minister after a week of riots.

The pace of seeding the corn crop in the United States is off to a slow start due to rains and soggy fields, and farmers have scaled back the number of acres to be planted with corn this spring as they switch more land to high-priced soybeans.

There is also the weak dollar, which has bolstered U.S. exports, and a three-week Argentina farm strike which has tarnished that country's reputation as a reliable supplier.

Chicago Board of Trade corn futures for the spot month, May CK8, were around $6.03 per bushel on Wednesday morning, up more than 50 percent from a year ago.

"It will be much easier to get out to the $7.00 to $8.00 (a bushel) level than back down to the $4.00 or $5.00 level," said Bill Nelson, grain analyst for Wachovia Securities.

"By miracle if we started reversing, and the dollar started rallying, then maybe it would be a little easier to talk about the lower levels. In our trading plans we're bullish on corn."

Further gains in corn prices could hurt the bottom line of poultry and livestock producers, and raise meat prices.