Global food costs soaring

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Global food costs soaring

Midwest floods feed grain price inflation


17 Jun 08 - Iowa Gov. Chet Culver said the state’s losses totaled in the billions of dollars, with 83 of 99 counties declared disasters. Millions of acres of farmland remain submerged.

Corn prices at the Chicago Board of Trade soared to an all-time high near $8 a bushel Monday as the relentless rains and overflowing rivers raised fears that Midwest farmers will lose production on as many as 5 million acres.

Corn prices already had more than doubled over the past two years, then jumped another 25 percent in just the past few weeks

Worldwide, food prices have risen 83 percent in the past three years, according to the World Bank. Bad weather in major grain-producing regions is part of the reason. (I think the other part is government interference in the free-market system.)

Concerns about rising demand and stagnant production have lead some grain-producing countries to halt exports, which has further crimped supplies for countries dependent on imports and driven up prices.

 “The issue of food security is becoming a big deal for a lot of food-producing nations,” said Ewen Cameron Watt, a market strategist at BlackRock Merrill Lynch. “There’s a whole host of food-producing nations — Egypt, Vietnam, Cambodia come to mind — who have effectively stopped exporting their surplus product shortages domestically and their effects on the domestic inflation.”

Demand for corn and soybeans also has been fueled by aggressive development of alternative fuels made from grains like ethanol and biodiesel.





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