We Haven't Even Begun To Feel The Effects Of Skyrocketing Corn Prices

Drought affected corn.A drought affected corn crop is seen near Paris, Missouri July 13, 2012.

Photo: Adrees Latif/Reuters

Corn contract prices are at record highs.But like any other traded commodity, there’s a delay in the “pass-through” of price changes to retail customers.

USDA economist Ricky Volpe told us we will only begin to see a reckoning at the supermarket once harvesting begins in two to three months.

“When we talk about foods like corn flakes, wheat thins, coca-cola, the inputs to those products are covered by contracts,” he said. “They’re storable, they’ve already been assembled.”

The batches of those products that will contain this year’s crop have yet to come to market, he said. 

The USDA has already predicted spikes of up to 4 per cent for all food through 2013, and gains of up to 5 per cent for beef and veal prices. 

If there is any silver lining, it’s that past performance is not a predictor of future behaviour.

That is, there’s nothing to indicate next year’s crop will be anything like this year’s, Volpe said.

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