Drop in corn prices seen next year

Local corn prices may drop below P11.50 per kilogram next year as demand for corn for feed production and ethanol production tapers off, according to Benito M. Domingo, president of Cornworld Breeding Systems Corp.

In an interview with The STAR, Domingo said he expects projects a slack year for the corn industry in 2009 which may discourage local farmers from cultivating more corn.

He said two recent events have affected the corn industry.

One is the recent decision of the government to lower the tariff of feed wheat, and the other is the global drop in crude oil prices.

With the removal of the tariff wall on feed wheat, local feed manufacturers are shifting back to the use of feed wheat as their primary ingredient in their feed products instead of using local corn.

The local corn industry had been enjoying a growth spurt in the last couple of months as world corn prices rose due to the high demand for corn for ethanol production.

As a result of the global economic turmoil, crude oil prices have dropped substantially, making ethanol production less attractive with the availability of again affordable gas and diesel products.

Thus, the availability of cheaper imported feed wheat and less demand for corn for ethanol production would translate to less demand for locally grown corn.

Lower demand would mean lower buying prices for corn farmers.