Grain prices surge; grocery prices could follow

Monday, January 14, 2008

Grain prices are surging again, thanks in part to a revision of USDA estimates of acres harvested in 2007.

Prices for March corn on the Chicago Board of Trade are $5.11, soybeans $12.95 and wheat $9.17 per bushel. While the price could be good for farmers who've been hit hard by higher fuel and fertilizer costs this year, the price increase could be bad for consumers at the local grocery store.

High farm prices have been blamed for the rise in retail food prices over the past several months, which have seen a gallon of milk sold locally go from less than $3 to over $4.

Kevin Groves, store manager of Country Mart in Jackson, said grocers can do little about the increasing prices because food producers are charging more.

Recently the prices of eggs skyrocketed to about $2 per dozen, up from less than $1 per dozens just a few weeks ago.

Groves said he's not sure if recent high grain prices will translate into more increases at the grocery store, but any time higher grain prices are discussed, increases in food prices seem to follow.

Kelly Smith, marketing and commodities director for the Missouri Farm Bureau, said higher commodities prices probably aren't the primary culprit in the rising price of items like cereal that use "pennies" worth of commodities per package. Instead, Smith said he thinks fuel costs are causing those increases.

But with meats, dairy and eggs, Smith said there's a direct link between higher prices and inflated grain markets.

Meat, dairy and poultry producers rely heavily on grain to feed livestock. They're directly impacted by the higher price of grain, and must pass that increase on.

"Those prices can't stay up and livestock sector prices not go up," Smith said.

Read more about this topic in tomorrow's issue of the Southeat Missourian.

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