Business

Corn prices hit 9-year high as commodity continues to rise


Dale Neting, 86, delivers a load of corn from his truck to a grain silo on his family farm in Ravenna, Ohio, October 11, 2021.

Dane Rhys | Reuters

Rising corn prices hit another major milestone Monday morning as global commodity costs continue to soar.

Contracts for Maize term in July was trading above $8 per bushel on Monday, the highest level since September 2012. The contracts were trading near $6 per bushel at the start of the year.

Corn is just one of a number of agricultural commodities whose prices have skyrocketed in recent weeks. partly due to the war in Ukraine. Ukraine is a major exporter of wheat and other commodities, such as sunflower oil, while Russia is a producer of wheat and many of the chemicals used in fertilizers. That has futures traders betting that higher input costs and greater demand for corn as a food substitute will drive up prices.

Even before the war, agricultural commodities were under some upward pressure as supply chain disruptions and high transportation costs were contributing to inflation across the economy. Droughts in the western United States and elsewhere in the world have also driven prices up.

In addition to global supply concerns affecting agricultural commodities, corn also has a potential additional source.

President Joe Biden announced last week that his administration will temporarily allow sell higher ethanol gasoline throughout the summer in an effort to offset the growing energy costs. Summer is usually one of the peak gas demand periods in the US

Rising prices of corn and other food commodities are contributing to the highest inflation rates the US has seen since the 1980s, prompting the Federal Reserve to begin raising interest rates. Some economists and Wall Street strategists worry that, in the process of trying to slow inflation, the central bank could push the country into a recession.

The World Bank warned earlier this month that global food insecurity is likely to increase this year due to higher prices.



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