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A sharp reduction in the corn harvest this year will squeeze consumers further at the grocery store and spark more criticism over using corn to make biofuel instead of food.
"It's our worst fears coming to pass," said Gregg Doud, an economist for the National Cattlemen's Beef Association.
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Source. monsanto.com Corn |
Doud said that higher corn prices would initially have more impact on eggs and dairy products, followed by poultry and pork.
Beef prices would also be affected but over the longer term.
A drop in corn production combined with federal mandates backing ethanol production will result in "massive increases" in food prices, said Scott Faber, vice president for the Grocery Manufacturers Association.
"Americans are already feeling the pressure of Congressional food-to-fuel mandates: in fact, food prices are rising twice as fast as inflation, placing significant pressure on American families who are already suffering from economic uncertainty," he said in a statement.
US farmers are expected to slash corn plantings by 8 percent this year to 86 million acres, according to the Department of Agriculture's annual planting intentions survey released Monday.
While soybean plantings rose as farmers devoted more acres to that lucrative market, the reduction in corn acreage raised fears of further pressure on world food prices.
Corn closed mostly higher on the Chicago Board of Trade after rallying to a record high at $5.88 per bushel amid concern worldwide "agflation" could accelerate.
Livestock producers globally are in the market for more corn even as more grain is diverted to produce biofuel in the United States.
Rick Tolman, chief executive of the Corn Growers Association, said he had expected a reduction in corn acreage because higher fertilizer costs make the switch to soybeans economical.
But he was surprised at the low number of corn acres, which some estimates say could shrink the corn crop to 12.2 billion bushels this year from 13.07 billion bushels last year. USDA also noted that the corn supply on March 1 totaled 6.859 billion bushels, well below most estimates.
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Data is a real-time snapshot *Data is delayed at least 15 minutes