Food Prices Rise By
16% Year-to-Date
By: iStockAnalyst Friday, August 01, 2008 9:55 AM
Symbols: ADM, TSN
Corn and soybeans hit record prices. Wheat slipped from
historic highs in March but is still up steeply from last year, according to a
U.S. Department of Agriculture report released Thursday. Grain prices gained 42
percent for the year overall.
Prices for farm products rose 1.9 percent in June alone,
according to the report. Grain staples including wheat and soybeans rose 1.6
percent during June. The price of livestock rose less than 1 percent.
The annual report measures the price that farmers receive
for their goods, not the ultimate price that consumers pay for food. Crops and
livestock costs amount to a fraction of the final cost of food, after
transportation, packaging and marketing costs also are factored in.
While soaring grain prices mean big profits for farmers and
agribusiness firms like Archer Daniels Midland Co. and ConAgra Foods Inc., the
trend is hurting meat companies like Tyson Foods Inc. Meat prices haven't
nearly kept pace with the cost of grain, which is the biggest input cost for
meat processors.
The USDA report shows corn and soybean prices climbing
rapidly since 2007. The cost for cattle and hogs has largely stagnated. Even
though corn farmers seem able to pass on the higher cost of their fertilizers
and fuel, meat companies haven't been able to do the same, said USDA
statistician Daryl Brinkman.
"Demand for (meat) is not quite there. And there is
plenty of supply to meet that demand, so that is keeping those prices pretty
steady," Brinkman said.
Corn and soybean farmers, on the other hand, are seeing more
demand than ever for their crops. While exports are increasing, so is domestic
use of the crops for biofuels such as ethanol and
biodiesel.
Corn sold for an average of $5.61 a bushel in June, up 69
percent from $3.32 in 2007. Soybeans sold for $14.20 a bushel, nearly double
last year's figure of $7.56. Corn went for just $2.14 a bushel in 2006 and
soybeans sold for $5.61.
Story Source: Deseret News (
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