The price of corn hit a new record price today as the 2011 harvest has been compromised by the Mississippi River floodand the government’s unceasing penchant for making ethanol. We will be reading more stories on the continued consequences on the flood’s impact on other agricultural products including wheat and rice.
What does this mean to the American consumer? Higher costs for cereal, soft drinks and corn fed livestock. What does this mean for the rest of the world?
That is dependent on the actions of our government. If the administration does not export our agricultural products in the face of domestic shortage, the shortages of food in third world countries will be blamed on the United States. We will have to wait and see if we will be able to feed the world.
Corn surged to a record approaching $8 a bushel on signs that global inventories will drop as adverse weather slashes acreage in the U.S., the world’s top producer, and demand rise for livestock feed and ethanol.
Worldwide stockpiles will be 111.89 metric million tons before the 2012 harvest in the Northern Hemisphere, the U.S. Department of Agriculture said yesterday. That was down from 129.14 million forecast in May and 117.44 million that the agency says will be in storage by Oct. 1. U.S. supplies before the 2012 harvest were estimated at the lowest since 1996.
Prices have more than doubled in the past year as wet weather limited the size of the 2010 U.S. harvest. Flooding in the past two months delayed planting and threatened this year’s crop prospects. The rally is boosting expenses for meat producers including Tyson Foods Inc. and makers of grain-based ethanol such as Poet LLC. Global food costs climbed in nine of the past 11 months, reaching a record in February.