06-24-2008, 02:01 PM
The latest food price increases are primarily due to floods in the Midwest.
Iowa, Indiana, and Illinois is where most of the corn is grown in the US. Corn prices influence the price of food more than any other commodity. Corn prices are setting new records almost everyday. High demand, weather, and speculative trading are the main factors.
Speculative trading plays a part in the higher prices. Corn is bought and sold just as stocks are. Traders increase demand and price by buying corn today to be delivered in the future. If the price goes up, they sell their corn and pocket the cash. If it goes down, they lose. This is one of those times their risk is low (unlikely to go down), so they buy more and drive price even higher.
Even tho the higher priced corn has not reached the end user and in fact may not be more when they actually buy the corn, they will raise prices in advance to cover their possible future cost.
Look for price increases in all meats and anything that has corn sweetener, like soda. Actually all foods will increase some.
It is not a crisis, but plan ahead to save money on food.
If you are interested, you can follow the corn market on the Chicago Board of Trade http://www.cbot.com
Allen
Iowa, Indiana, and Illinois is where most of the corn is grown in the US. Corn prices influence the price of food more than any other commodity. Corn prices are setting new records almost everyday. High demand, weather, and speculative trading are the main factors.
Speculative trading plays a part in the higher prices. Corn is bought and sold just as stocks are. Traders increase demand and price by buying corn today to be delivered in the future. If the price goes up, they sell their corn and pocket the cash. If it goes down, they lose. This is one of those times their risk is low (unlikely to go down), so they buy more and drive price even higher.
Even tho the higher priced corn has not reached the end user and in fact may not be more when they actually buy the corn, they will raise prices in advance to cover their possible future cost.
Look for price increases in all meats and anything that has corn sweetener, like soda. Actually all foods will increase some.
It is not a crisis, but plan ahead to save money on food.
If you are interested, you can follow the corn market on the Chicago Board of Trade http://www.cbot.com
Allen