Corn Prices

Companies that grow corn, such as Archer Daniels Midland, make lots of money growing and selling corn and are very successful. Ethanol is mostly what is causing corn prices go up. It is a source of renewable energy used in cars. In many states there is a law that requires all gasoline to be at least 10% ethanol. Companies like Monsanto and DuPont make money by selling cornseed geneticly modified to become ethanol.

Moreover, the price of corn for July delivery jumped Monday to an all-time high of $7.60 a bushel on the Chicago Board of Trade. It was the eighth straight day of trading in which the price hit a record high. The price has already shot up 71% this year, boosting food prices worldwide and fueling what is fast becoming a global inflation epidemic.

Corn is used in ketchup and other foods with corn syrup.

Many businesses use corn, such as feeding dairy cows corn for milk, cheese and ice cream.

The price of corn has surged 35% in the past year. And Terry Franci, a senior economist for the American Farm Bureau Federation, said last week that corn prices will continue to rise. In fact, Franci thinks that after averaging between $2 and $3 a bushel for decades, prices could climb as high as $6 a bushel - a threefold increase from 2005. And food prices across the board are climbing to historic highs as a result.

Last week, the USDA put March 1 corn stocks at 6.859 billion bushels, below the average trade estimate of 7.078 billion. But despite the shortfall, the USDA also said that farmers will plant only 86 million acres of corn this year, an 8% drop from 2007. That’s because many farmers are finding bigger profits in wheat and soybeans. In Iowa, farmers are expected to plant 13.2 million acres of corn this spring, down 7% (or 1 million acres) from last year. Iowa is expected to plant 9.8 million acres of soybeans, up 14.6% from 8.6 million acres planted in 2007. In Missouri, farmers are expected to plant 3.1 million acres of corn this year, down from 3.45 million a year ago. But they will plant 5.2 million acres of soybeans, up from 4.6 million a year ago.

There are many reasons for corn’s price spike. Growing populations, a weak dollar, and high energy costs are all forces at work. But only one cause for higher prices is actually furnished by the U.S. government: The production of ethanol fuel. American farmers account for about 42% of the world’s corn production, and the fact that corn comes from the Midwest rather than the Mideast makes it a very popular alternative energy candidate. So popular in fact that mandates for renewable fuels, chiefly ethanol derived from corn, have steamrolled through Washington.

The 2005 energy bill contained the first-ever requirement - known as the Renewable Fuel Standard (RFS) - that alternative fuels be mixed into the nation’s gasoline supply.