In this note we set out three illustrative scenarios for the price of US corn. If the dry weather remains the key driver and conditions turn out to be as bad as those in 1988, then corn could still rise as far as 930 US cents per bushel, from the current level of around 740. If crop damage is more limited, as in 2011/12, prices might be capped at around 800 cents. But the most likely scenario is that weather concerns are overtaken by renewed worries about the global economy and the future of the euro, as well as fresh falls in oil prices. In this case, we believe that the price of corn would drop to 540 cents by the end of 2012.
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