Food Prices Primed for Yet Another Increase

Food prices have yet to peak, if the way markets reacted to a new agricultural report are any indication. The report stated that farmers plan to cut back on corn acreage in favor of soy bean and wheat.

Corn prices hit a record high of more than $6 a bushel, and some analysts expect it to keep rising. The price of corn directly influences prices at the grocery store. Corn, long subsidized by Congress, is an ingredient in most American foods, from any meat derived from an animal fed feed corn to anything with the ubiquitous corn oil.

Farmers planted more acres of corn in 2007 than at any time in 63 years, but plan to cut back on production by 8% in 2008, primarily because the prices for soy beans and wheat are high too, and corn demands more expensive fertilizer to grow. Last year's crop was driven by demand for ethanol, which is in such high demand because Congress mandated its use as a biofuel.

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