From Yahoo Finance and A P.
"Lower corn and soybean output sends prices surging
Government report showing decline in corn and soybean production sends prices surging "
Michael J. Crumb and Christopher Leonard, Associated Press, On Wednesday January 12, 2011, 5:35 pm EST
DES MOINES, Iowa (AP) -- A surprising drop in the U.S. corn and soybean crop sent grain prices surging to their highest levels in 2 1/2 years Wednesday. The price increases stoked concerns about higher food prices and tighter supplies of feedstock for food and biofuels.
Wet weather and abnormally high temperatures contributed to lower U.S. corn production in 2010, according to a report from the U.S. Agriculture Department. The report also showed declines in soybean, wheat and grain sorghum production.
March corn futures jumped 4 percent to settle at $6.31 a bushel. Soybean prices jumped 4.3 percent to $14.15 a bushel.
The report confirmed traders' fears that historically low stockpiles of grain and oilseeds could leave little buffer in coming months as demand rises with a growing global economy. Prices reached their highest points since the financial crisis of 2008 caused a collapse in global demand for food and fuel.
"It's just confirming that supplies are lower than we thought, and demand is better than we thought, and when that happens you see prices bidding up," said Chad Hart, an Iowa State University grain marketing specialist.
It can take months for higher grain prices to work their way to the grocery store. Raw ingredients are just a fraction of the cost for processed foods.
But companies like Hormel Foods Corp. have already announced price increases of more than 3 percent this year. Higher grain costs will put more pressure on them to pass costs along to consumers.
Lower corn and soybean output sends prices surging - Yahoo! Finance
So with budget deficits and high prices, why are we still subsidizing corn? And I thought the Obama administration told us we have no inflation? Looks like food pricing are rising fast.
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