Spring Flooding Brings Highest Corn Prices Ever

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Corn and oil prices keep rising and are having more drastic effects on our lives and killing us in the pocketbook. All other grain crops are being affected but the USDA says that corn ethanol has only affected food prices by 4.0%? I call this fuzzy math. What does this mean for future food costs? We can bet that food prices will continue to rise and will see little price moderation in the months to come.

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Latest news reports are saying that the 2008 corn crops in the corn states especially Iowa have been destroyed by flooding.

Last week, the price of corn rose above $7 a bushel on the commodities market for the first time, and soybeans rose sharply, too, reacting to the harsh weather hampering crop production across the Midwest. In addition to Iowa, the farming states of Illinois, Indiana, Wisconsin and Minnesota have suffered an unusual level of flooding this year.

Soaring global demand in addition to the increased use of corn for ethanol, an alternative fuel, have shrunk the worldwide supply of staples that are the core of practically every continent’s diet.

Corn prices at all time high due to floods.

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Thunderstorms affected areas from the central Plains to the Midwest recently, bringing more than four inches (10 centimeters) of rain to parts of Iowa, Massachusetts-based Meteorlogix LLC said in a report. Further storms are forecast for the next upcoming days. Corn and soybeans planted in wet, cool soils develop shallow roots, increasing the threat of damage from dry weather in July and August. Like I have always said, what happens to the ethanol price when the corn is greatly affected by the weather? One of the main arguments of the corn ethanol producers on higher ethanol prices is “blame it on the weather”. Check out this article if you still think corn ethanol is the answer to our fuel problems.This article gives many reasons why America has chosen the wrong horse to ride for an alternative fuel, corn ethanol. Be sure to download the audio presentation.

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At a moment when the country’s corn should be flourishing, one plant in 10 has not even emerged from the ground, the Agriculture Department said Monday. Because corn planted late is more sensitive to heat damage in high summer, every day’s delay practically guarantees a lower yield at harvest.

Harvests ebb and flow, of course. But with supplies of most of the key commodities at their lowest levels in decades, there is little room for error this year. American farmers are among the world’s top producers, supplying 60 percent of the corn that moves across international borders in a typical year, as well as a third of the soybeans, and a quarter of the wheat and a tenth of the rice. American corn and soybean farmers are suffering from too much rain, while Australian wheat farmers have been plagued by drought. “The planting has gotten off to a poor start,” said Bill Nelson, a Wachovia grains analyst. “The anxiety level is increasing.”

“With concerns about weather-related production losses, surging oil prices and the weaker dollar have fueled speculative demand for agricultural products that are fundamentally strong because of tight supplies,” Daisuke Yamaguchi, an analyst at futures broker Yutaka Shoji Co. in Tokyo, said today.

Prices for the cereal have gained 69 percent in a year, fueled by growing demand for grain-fed meat in Asia, market speculation and the push to grow corn for ethanol. Wheat, soybeans and palm oil also reached records this year, sparking food riots from Haiti to Ivory Coast and yet the U.S.D.A. says food prices have only been affected slightly by corn ethanol and bio-fuels.

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America’s corn crop is in trouble. And U.S. consumers are going along on the bumpy ride. Torrential rains in the heart of the Corn Belt lifted prices Wednesday above the $7-per-bushel mark for the first time in history. Even before the floods, U.S. corn stockpiles were low, planting delays were widespread and ethanol-fueled demand was soaring.

At about the same time that ethanol production was ramping up in the United States, so did food prices around the world. With government support in the form of tax credits and grants boosting demand, and oil prices on the rise, acreage that might have been allocated for food was sowed with corn slated for ethanol.

The real truth is that America is paying now. Most Americans have believed the idea that these bio-fuels are going to be the salvation of us all. Also, many people want and expect the federal government to control these commodities and believed the feds will somehow save the people from high gasoline prices and will do something to bring gasoline prices down. People: the federal government is the problem. Congress has done nothing for the last 30 years, concerning energy and fuels, so you might as well get use to the high prices. If we don’t drill and use what we have, then we will pay sooner or later. Sooner has passed and Later is now. How much will your heating oil cost you this winter? Think food costs are going to go back down?

Ed Usset, a University of Minnesota grain specialist, described corn prices as now moving “from incredibly high, to incredibly higher.” “We’ve had this idea that technology and genetics have made us immune (to poor harvests), that we can’t have a short crop anymore. And I’m afraid that’s just not true.”Because it’s only June, “We’ve got a long ways to go,” Usset added. “Tomorrow the sun could come out and make up for lost time. But today, the market is worried. And for good reason.”

Corn prices rise to all time high due to flooding in the midwest.

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Corn prices climbed further into record territory Thursday after more rain doused the Midwest, leaving flooded corn crops deeper underwater and threatening livestock owners who depend on the grain to feed their herds. Using a product like corn that will be drastically affected by flooding or draught is inviting major problems in ethanol production. Check out my previous blog, concerning using Kudzu in place of corn for ethanol production. Corn ethanol is not going to fill the role as a gas substitute or extender, even though corn ethanol is being used as a extender for gasoline, and will not bring relief to high and higher gasoline prices. How much higher will corn ethanol drive up the blends of ethanol/gasoline (E85) when ethanol supplies become tight due to poor crop yield?

As previously stated:

As the United States encourages more nations to get into the bio-fuel game – thus reducing dependence on Middle East oil – it seems to me that the subsidies will have to be reduced as well. If we’re going to create a true market for bio-fuels, they’ll have to stand on their own, without a taxpayer-funded crutch.

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