Corn is used both in food for humans and as cattle feed. It is also the main ingredient of most ethanol-based fuels. There has been real hope that this kind of alternative energy will cut US reliance on gas. But, the price of corn is up 47% this year. That undercuts the value of ethanol as its price rockets.
The corn harvest in the US could be relatively poor this year, putting more pressure on food prices, both here and in countries where large numbers of people are under-nourished. Another run-up in corn could help drive yet another commodity inflation spiral.
According to Bloomberg, "Rainstorms sweeping the biggest corn states in the U.S. are damaging a crop that's already failing to keep pace with global demand."
The trouble with corn crops is that they cannot be easily replaced by any other agricultural product. And, there is pressure on wheat and soybean prices already.
The solutions to corn yields, are, unfortunately, long-term. Companies, led by Monsanto (NYSE: MON) are increasing research and production of genetically altered seed which will grow in harsh climates and poor soil.
But, that fix to the problem is several years off, and the acute problem is now.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
6-10-2008 @ 11:51AM
speculator said...
Over the next 5 year all commodity prices will move. Sugar is a lot better value than Corn.
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