The great corn gold rush - Mar. 29, 2007
Four-dollar corn. The price probably doesn’t mean much to many Fortune readers, certainly not the city slickers who wouldn’t know a combine from a planter. But in farm country, $4 corn is more than a big deal. It’s a phenomenon.
“It’s the center of conversation in the center of the country,” says Elizabeth Hund, head of agricultural lending for U.S. Bancorp. (Charts)
In the span of just eight months, the price of the U.S.’s most important crop - our biggest agricultural export as well as the staple feed for our livestock - has doubled from $2, about where it had been stuck since the late 1990s, to $4 a bushel.
The cause is soaring demand from ethanol plants, which bought 2.2 billion bushels last year, 34% more than in 2005. Previous price spikes were short-lived and usually caused by drought, but the futures market thinks this rally has legs.