Food manufacturers promised Mexico's government on Wednesday they would freeze prices on more than 150 food products to help families cope with the rising cost of food, The Associated Press reported Thursday.

Mexico President Felipe Calderon said prices for goods including beans, canned tuna, fruit juices, coffee, ketchup and canned tomatoes will remain fixed until December 31, 2008, The AP reported. Calderon blamed rising food prices on surging global energy prices, food demand in China, and the use of corn for ethanol production.

Good intention, wrong method

Economist Glen Langan said he agreed with the need for food assistance for Mexico's poor, but disagreed with the mechanism.

"A more effective program would be a larger cash payment or food subsidy to citizens," Langan said. "The pricing mechanism should be kept in place, because it has many benefits. Cash payments or subsidies to poor residents are much more targeted and don't provide a benefit to those who don't need it. [Mexico President] Calderon did announce a monthly subsidy, 120 pesos [$11.60], but it isn't large enough."

Those businesses relying on feed commodities have certainly had to cope with a series of bullish sector trends in the past two years. Increasing demand for food in rapidly growing emerging market countries and the use of corn for ethanol have been the achieve price drivers.

Now, at least for the short-term, add weather concerns. Corn approached a record $8 per bushel Monday as the prospect of more rain on already-soaked Midwest farms increased the likelihood of extensive crop damage, Bloomberg News reported.

Soybeans, wheat, and rice also rose Monday at midday after the National Weather Service predicted that flooding in the Midwest will probably result in "hundreds of millions of dollars" in crop damages. Rice, a staple for about 50% of the world, rose 50 cents to $20.80 per 100 pounds. Soybeans traded up 19 cents to $15.79 per bushel.

Economist Glen Langan, whose specializations include agricultural economics, told BloggingStocks Monday the world needs a strong harvest, across the feed spectrum, from the United States and other nations. "A strong harvest would take some of the price momentum out of corn and wheat, in particular. Unfortunately, we may be headed for a sub-par harvest in the U.S. if current weather patterns persist," Langan said.

Corn rose to a record Monday on talk that heavy rain in the Midwest U.S. will cut supplies, Bloomberg News reported Monday. Corn for July delivery rose about 22.25 cents to $6.73 per bushel early Monday.

Prices also rose as traders sought corn as yet another hedge against inflation amid rising oil costs and a weak/falling U.S. dollar, Bloomberg News reported Monday. Demand for corn is also being bolstered by the use of the commodity as an ethanol source.

Oil fell $1.60 to $136.94 per barrel by midday Monday on profit taking, following its record two-day surge last week. Meanwhile, the dollar fell slightly against the euro and pound, to $1.5715 and $1.9756, respectively, but rose 1 yen to 106.03 versus Japan's yen.

The world is flat... for farming, too

Economist Glen Langan told BloggingStocks Monday those who find corn to be a curious inflation hedge are behind the curve.

Billionaire investor George Soros said Thursday that the boom in commodities is still in a "growth phase" despite the fact that prices for oil, wheat, rice, and gold have risen to records in 2008, Bloomberg News reported Thursday.

Soros said the relative stock market slump, combined with favorable, long-commodities demand, has prompted institutions to direct money to commodities, creating a "commodity as asset class" phenomenon, Bloomberg News reported. He added that increasing institutional involvement was creating a generalized commodity bubble.

Relative shortages

Moreover, demand for selected commodities (oil, rice, wheat) is so great, it's creating relative shortages, Soros added, which is only heightening the return on equity potential of commodities, Bloomberg News reported.

Rice, a staple food for about 3 billion people, is becoming a precious commodity as a result of rising demand -- a reality that's prompting some agriculture watchers to ask whether global grain producers will be able to keep the world adequately supplied amid solid emerging market economic growth.

China, Egypt, Vietnam, and India, which represent about one-third of global rice exports, curbed sales this year, and Indonesia did so as well, Bloomberg News reported Monday. Grain and food demand is increasing at above-trend rates due to solid economic growth in emerging markets. These regions are experiencing expanding middle classes -- a factor that historically has almost always led to rising per capita food consumption in the country where the growth occurred.

As a result, the price of rice and other commodities has soared -- rice hit $21 per 100 pounds on Monday, Bloomberg News reported -- and governments may face increased social unrest, given the pivotal role rice plays in many developing nations.

Rice hit a new all-time high, and corn neared a record on talk that commodities demand for grains will outstrip supply, Bloomberg News reported Thursday.

Rice, which is a staple food for about 3 billion people, surged 3.6% to $20.26 per 100 pounds Thursday, while corn for May 2008 delivery rose about 0.5% to $5.9875 a bushel, Bloomberg News reported. Government curbs on grain exports and bad weather are contributing to concerns that strong economic growth in emerging markets will cause demand to exceed the market's ability to provide adequate grain supplies.

The song remains the same

Economist Glen Langan told BloggingStocks Thursday the song remains the same regarding commodities, long-term. Although the commodities sector is overbought short-term, that short-term trading condition does not change the sector's secular, long-term fundamentals, which remain very bullish, he said.

"You could argue that a short-term bubble still exists in commodities like rice, wheat, soybean, and corn, so a word to the wise for any Johnny-come-lately traders," Langan said. "But from a fundamental and an economic perspective, grains and other commodities will continue to trend higher, after a correction. Decisions by China, India and others to cut rice exports speak to this trend. I don't see it ending in 2008."

The UBS Bloomberg Constant Maturity Commodity Index of 26 commodities has more than tripled in the last six years, as global demand, led by emerging market growth, has outpaced supplies for both commodities and raw materials.

The decade's dramatic rise in crude oil prices to roughly $90 per barrel levels has had a lesser-known, but equally consequential impact on life in the developing world -- a rise in price of cooking oils from palm, soybean and many other types of vegetable oils, The New York Times reported.

The United Nations Food and Agriculture Organization said that exports of 60 internationally-traded foodstuffs increased 37% in 2007, following a 14% rise in 2006. Further, price increases in cooking oils hit the developing world particularly hard, as the bulk of poor families in these countries grow their own food, but buy the oil to cook it with.

In the case of palm oil, The Times reported that rising consumption in China and other emerging markets, along with use of the oil in developed markets as a substitute for chemically-altered trans fats, are two major factors behind its price rise.

Biofuel nexus

However, for other oils the rise in crude oil is playing a considerable role, according to London-based economist Mark Chandler. Chandler, whose economic specialization includes developing world economies, said crude oil's rise has led to a dramatic rise in the use of cooking oils as biofuels.

Bunge Limited (NYSE: BG) is everywhere on the food chain according to the AOL Money & Finance profile. This includes being the leading global soybean processor, a leading South American fertilizer maker and the world's largest oilseed producer. The stock has hardly taken a breath in its ascent over the last five years. On December 28, 2007, BG closed at $119.03 per share.

Soy is used in so many products as an alternate ingredient and/or vegan-friendly product, with new ones being created every day. This fact alone might make Bunge a growth story, even if world demand for food was not increasing at such a rapid pace.

Over the last year, Bunge leaped 70%; in the last five years, BG has gained 433%. Normally this is not a place I would be looking for a cheap buy. However, its P/E ratio is only 19, which, given its growth chart, it still seems cheap. When we consider its P/S of 0.33 which is cheap, and a small dividend yield of 0.58%, it does seem like a value, that is if demand continues to rise.

I believe it will continue to rise since the rapidly growing global economy is raising the standard of living dramatically for hundreds of millions of "newly minted capitalists" in China, Russia, India, Eastern Europe, Brazil and elsewhere. Improved of at least changing diets are 'feeding demand,' and people are also eating much more.

With the markets' choppy/consolidation pattern continuing, it's best to consider a defensive stock or two for your portfolio, and Archer Daniels Midland Company (NYSE: ADM).

The argument here is not that the biofuel trend is over; hardly. However, the frenzy that accompanied the financial world's realization that biofuel could represent a suitable alternate energy form, for some energy users, appears to tapering.

Biofuel interest remains high, and ADM is likely to benefit from wider and wider use these fuels. Most analysts see accelerating annual earnings growth on strong corn and soybean demand, with pricing power. Further, it's worth underscoring in these high-energy-cost times that ADM is foremost a large, vertically-integrated, food commodity company (wheat, corn, soybeans), and food rarely goes out of style. The Reuters F2008/F2009 EPS consensus estimates for ADM are $2.58/$2.97.

Note: Technical analysis agnostics stop reading here; all others continue.]

Technically, ADM's chart looks adequate. A base appears to be in place in the $32 range, and the stock has moved back above its 50-day and 200-day moving averages. Further, ADM's low p/e of 11 also reduces the stock's risk/return ratio.

Stock Analysis: Archer Daniels Midland is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from ADM's shares. Sell / Stop Loss: $24.

Visit AOL Money & Finance for more earnings coverage

The Mosaic Company (NYSE: MOS) volatility elevated as MOS at record high into EPS.

MOS, a producer and marketer of concentrated phosphate and potash crop nutrients, was spun out of Cargill in 2004. MOS is recently up 10 cents to $53.35. MOS is expected to report earnings per share (EPS) on October 9th. MOS October option implied volatility of 52 was above its 26-week average of 40 according to Track Data, suggesting larger price risks.

Potash Corp./Saskatchewan (USA) (NYSE: POT) volatility elevated as POT at record high on grain price rally:

POT, the world's largest fertilizer enterprise, by capacity, was recently up $1.43 to $105.58. SBSH says "Potash shortages possible in 2008." SBSH goes on to say "we think high prices for wheat and corn will send a signal to farmers in developing countries like China to increase Potash application rates." POT over all option implied volatility of 46 is above its 26-week average of 39 according to Track Data, suggesting larger price risks.

Option update provided by Stock Specialist Paul Foster of theflyonthewall.com.

Our failure to prioritize alternate fuel development over the past 20 years is showing up in more places than just the gas pump. This year, experts anticipate a huge reallocation of U.S. acreage from soybeans and cotton to corn, yet the price of corn-related products will continue to climb.

Acres planted in corn come mostly at the expense of soybeans, another hugely important crop. As our soybean inventory dwindles, look for increased prices in this market as well.

This is bad news in several ways. Many argue ethanol produced from corn has a negative energy value (NEV); i.e., it requires more energy to produce than it supplies.
The ethanol produced is more expensive than petroleum. And, worst, we are allocating the very best of our cropland to grow fuel crops, while other plants that could take advantage of marginal land remain underdeveloped.

Most of us remember President Bush's famous reference to switchgrass, a hearty grass that thrives in poor soil and produces energy fourfold what it requires to cultivate, yielding 1.5 times that of corn per acre. Another candidate, the jatropha bush, is already used to power rail traffic between Mumbai and Delhi in India. Like switchgrass, the bush can grow in poor soil and yields biomass easily converted into a biodesiel fuel.

While most of the world cannot grow corn or, like Brazil, sugar cane, crops such as switchgrass and jatropha could provide struggling economies with cash crops to aid in their development, while at the same time helping to solve the world's fuel crunch and diversify its sourcing.

Growing corn on our best land squanders our natural resources. How long will a free market support such inefficiency?

As I watched the enthusiasm for ethanol grow in the wake of the President's State of the Union address, I found myself wondering what the impact of his support would mean to not just the corn consumers, but also companies that depend on soybeans. Why? Because Matthew Roberts of the Ohio State University, an expert on energy and agricultural commodity markets, anticipates between five and seven million acres of U.S. cropland will be planted in corn instead of soybeans in 2007. According to the American Soybean Council, In 2004, 75.2 million acres were planted in beans.

I spoke to Roberts today about the ramifications of this shift. He explained that, although soybeans are currently selling at about 40% over their ten-year average, this can't match the 88-90% premium corn now enjoys. Hence, the shift.

However, the prospect for soybean consumers is not dire, because he tells me we currently have the largest worldwide surplus of soybeans in history. Part of this surplus is in fact attributable to ethanol. When making ethanol, the material left after the ethanol is extracted can be used as livestock feed, replacing more expensive ground soybean feed. The more ethanol, the less need for soybeans.

Growing corn out of the normal field rotation of corn and beans does come at a cost, according to Roberts, as more fertilizer and other inputs will be required. At $4+ a bushel corn, though, farmers are willing to pay that price.

He also notes that, as the ethanol movement accelerates, several groups are beginning to raise serious questions, including the oil industry, those who raise livestock (concerned about feed costs), and anti-poverty groups (concerned about food prices).

The bottom line? Supplies of soybeans are currently abundant enough that this shift should not put pressure on the cost of the product. This is good news for major users of products dependent on soybean feed, such as eggs, chicken, and pork, as well as soybean oil and meal. No reason to dump your Tyson Foods, Inc. (NYSE:TSN) stocks because of soybeans.