Corn And Milk: A 1-2 Inflation Combo

US - The boom in prices for corn, milk, beef and other food products is only getting louder.
calendar icon 20 June 2007
clock icon 2 minute read
The recent rapid growth in ethanol demand has sent corn prices soaring.

While it's old news that corn prices have nearly doubled over the last two years - think ethanol - now experts say corn could move sharply higher still, pushing prices up further for milk, beef, pork and a host of other commodities.

"If we're just at the beginning of this, we could see underlying [consumer] prices go up another 3 to 5 percent - if things get rolling possibly up to another 10 percent," said Darin Newsom, an analyst at agriculture consultant DTN. "I don't want to scare people, but I certainly see a very solid increase in consumer prices."

When corn prices rise, that can make everything from cereal to snack foods to soft drinks more expensive since corn is used by itself or as a sweetener in so many products. Prices for livestock feed also rise, meaning higher costs for producers of steak, pork and chicken.

Got milk? Get ready to pay more

Corn prices are expected to surge another 50 percent in the coming months. Retail milk prices, meanwhile, have already jumped nearly 10 percent since November, but some experts are now predicting another 30 percent increase.

That means consumers already wrestling with $3 a gallon gasoline could be paying $4 or more for a gallon of milk.

But for milk, at least, the latest surge in prices hasn't been all about corn.

Source: CNN Money.com
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