Corn prices hit all-time high

Hot, dry weather across the country has ruined crops. Is it time to rethink the ethanol mandate?

By Kim Peterson Jul 19, 2012 12:47PM
Blistering summer weather has damaged fields across the Midwest, sending corn prices soaring to all-time highs. You'll see the impact on food prices across the board.

This year's expected corn crop is dropping by the week, and corn prices have shot up incredibly fast as a result. Corn futures hit record highs Thursday, with September futures prices up about 50% from last month, The Wall Street Journal reports.

Post continues below.
Customers will feel the pain, since corn touches so many parts of our diet.

One area already affected is meat. As the price of corn rises, the price of cattle feed goes up and the production of livestock drops, according to John Anderson, a senior economist with the American Farm Bureau Federation. So expect to see higher prices for beef, chicken, eggs, pork and dairy products. Beef prices had already been rising.

Another economist says shoppers may see an increase of only 1% or so. "A 50% increase in the price of corn tends to raise total shopping bills by about 1%," Ricky Volpe, a research economist with the U.S. Department of Agriculture, told SmartMoney.

InvestorPlace has a nice roundup of 70 things that might cost more because of surging corn prices.

The volatile price of corn has renewed the debate about changing the federal ethanol mandate. Congress passed the Energy Independence and Security Act in 2007, but markets are still struggling to meet the law's grain demands, Purdue University's Steve Leer wrote last year.

About 27% of the country's corn drop went to ethanol last year to meet the federal mandate, according to Leer. Purdue's Wally Tyner, an energy policy specialist, said that by 2015, the law requires 15 billion gallons of ethanol to be consumed per year, regardless of the price of corn.

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106Comments
Jul 19, 2012 2:15PM
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Ethanol is the biggest political scam ever pulled on the American public. It decreases MPG of each gallon of gas thus the oil industry loves it. It requires farmers to reduce production of feed grain and food substance thus hitting you at the grocery store. And most of all but not least by far it destroys gaskets and fuel systems in vehicles and especially small engine items like chainsaws, lawn mowers ,boat motors, generators, you name it costing Americans billions in repair and replacement costs that never would have happened if not for ethanol in gas.
    This political scam is beyond reproach even against the bank bailouts if added up in total cost. Every Congressman that voted for it ought to be put in the soup line come November.
     They did it to you, time to return the favor.

Jul 19, 2012 2:47PM
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I dont understand why the drought has affected prices now as all the products that use corn are bought on futures. Warehouses are full of these products waiting to be put on the shelf. But we will be paying premium now for products already ready and waiting. The manufacturer has already paid last years prices but we will be charged for this years prices. But if there is a bumper crop next year, can we expect prices to drop??

Jul 19, 2012 3:05PM
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  Using crops like corn to make ethanol makes little sense. The diesel used to plant, weed, spray herbicides and harvest takes almost as much energy as is extracted. It's only profitable because the government gives 50c a gallon subsidies to producers.
Jul 19, 2012 2:27PM
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Its not just the drought.  In California the new 2012 CARB regulations on commercial/diesel trucks go into effect and many truckers will be unable to go into California, others in California will leave or go out of business and those willing to modify to meet CARB are charging more to haul frieght so many items will increase in price.

Corn, Soybeans, Hay are hit by drought and wildfires will be in short supply driving up costs.

Cattle herds are being thrown on the market causing prices to drop but only in the short term. Many herds will take years to rebuild so prices will rise drastically for beef soon also.

America is heading for a serious FOOD crisis in supply and cost.

Jul 19, 2012 3:47PM
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Gives Obama another excuse why we are in an economic disaster under his watch (btw I voted for him in '08) He blames the tsunami, the earthquake, the Arab spring, the European situation, strong headwinds. I can hear him next speech blaming "unprecedented drought conditions not seen since the 1950's" as the next excuse why there are no jobs. I have ran out of excuses for my friends that rib me for voting for him. Obama PROMISED he'd have unemployment under 6% and I am still working at 2 part time jobs with a 4 year college degree. No criminal record and a  perfect driving record. Not one reply to over 100 resumes job openings sent out for full time jobs that offered at a minimum $10.50 an hour.
Jul 19, 2012 4:15PM
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At last fair and balanced trade, a bushel of corn the same price as a barrel of oil! Can we get an organization called CORNPEC  and put the middle eastern oil sheiks over a bushel basket! A bushel of corn for a barrel of Oil....How about a grain embargo just to prime the pump!
Jul 19, 2012 1:59PM
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Its time to stop subsidizing corn and allow farmers to grow hemp.  corn is lousy food, lousy animal feed, and hemp is a much better bio fuel PACKED with oil, and its drought tolerant!  But the cotton lobby, the oil lobby, the corn lobby, and other special interests keep suppressing this logical move for their own selfish interests.

Jul 19, 2012 2:35PM
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Now is the time to convert long-haul truckers over to natural gas.  This would be the easiest way to make a huge impact on our fuel needs... as new natural gas tanks at truck stops would be much more economically installed than they could be at neighborhood gas stations for the family car.

Jul 19, 2012 4:19PM
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MSN please stop with the advertisment i see enough commericals as it is. report the news please

Jul 19, 2012 3:01PM
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Corn for fel was always a bad idea but try to stop a subsidy! It takes more energy to make a gallon of ethanol from corn that you ever save in fuel or oil cost. They need to set aside the ethanol mandate and the subsidy for ethanol. It is a stupid idea to make a fuel out of a food stock.

 

All your riots in the middle east "Arab Spring" started over food prices and unemployment. The American consumer should be spared high food prices during a deep recession. Stop corn exports also until corn yields are back up...Russia stoped exports a few years ago when they had crop/grain failure but his out fit won't.

Jul 19, 2012 3:15PM
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Thank God we are wasting corn on Ethanol....   We save a little on gasoline, and pay through higher food prices...  

Green Energy be damned...  Obama END THIS NOW!
Jul 19, 2012 2:57PM
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When you use food for fuel its like burning your furniture for firewood.  Corn and sugar cane are now being used for fuel.
Jul 19, 2012 2:55PM
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Morrow's,
I agree we should stop using corn as an source for ethanol, however there is a by product from it. Animal feed is the by product.
However switch grass is a far superior crop to use in place of corn are few of the reasons are;
1. Switch grass is a perennial, which means that it comes back every year and does not have to be replanted. Without having to replant you use less fuel to produce it.
2.  Switch gr**** produces more bio mass per acre than corn. More bio mass equals more ethanol.
3. Switch grass is less prone to drought conditions. It's roots penetrate far deeper into the soil than corn. Plus because switch grass is not planted in rows such as corn it protects the soil from several things, moisture evaporating from soil, weeds are less likely to prosper because of the dominate switch grass.

That's just a short list of advantages of switch grass.
Jul 19, 2012 3:33PM
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Using corn for ethanol was stupid to begin with. It is only a "feel good" fantasy of current administration. They are too lazy or stupid to look at the 1970s-80s government reports on alternative fuels to see that ethanol pollutes more than gasoline and takes more energy to produce than it provides.  Stop subsidies, mandates and other government stupidity and let the market work. Corn can be grown in the West if the market  allows the cost .  Importers have made the tomato farming a bust, so that land could be devoted to corn.
Jul 19, 2012 4:07PM
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IF someone would get their head out of the clouds and open their eyes , and revive the industrial hemp industry in this country it would elevate some of the need for corn, that needs to go other places, now that corn is used in so many ways, they need to change some of the laws that keep us from using this plant that has so many uses , its a greener alternative less fertilizer and pest control chemicals and more tolerant to dry conditions are just a few reasons hemp needs to be reestablished and revived . 
Jul 19, 2012 4:22PM
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the first ethanol was made from HEMP by HENRY FORD and that needs to be looked at now and take some of the load off the corn and ease the food prices .
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this is good reason we should not be using our food crops for alternative fuel plus we do not get as good of mileage from it oil is still our best choice for fueling our vehicles there is no by product from ethanol like oil  
Jul 19, 2012 3:18PM
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oh, whoops, turns out subsidizing corn and putting it in everything could have been a bad idea in case something happens to the corn crops?!?!  SHOCK!!!
Jul 19, 2012 4:17PM
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Ok

I think the time has come to bail from the corn as a additive to fuel, obviously we should use straight crude for combustion horse power and food to feed people. we all know there is enough oil out there to keep us stable for another century.

maybe the drought would be survivable if we had more corn for food.... just a thought.  

Jul 19, 2012 3:55PM
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Corn ethanol is a cruel joke. The return, as in energy in for energy out, is not worth trying. That money should've been put into other alternative energy sources. Even if it needed to stay in some type of other ethanol form like switch grass or promising algae producing ethanol. Scrap the program and take what we learned and apply it to something that could actually make a difference. Stop causing food prices to go up for no reason. Also end speculators, I know more to it than that, but that will help too.

I think its time

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