The ongoing demand for biofuel production continues to spillover into the prices we pay for food.  Despite larger US planted acres and generally favorable weather in the corn belt this year, increased demand for energy alternatives both domestically and abroad have diverted some of these acres away from food and associated industries.  Higher corn prices translate to higher feed prices, which are reflected at the consumer level by price increases seen in milk and cheese, beef, poultry and grains based products.  The World Bank food price index estimates that the basket of basic food commodities (including grains, dairy, sugar, meat, poultry, etc.) is currently 21% higher than it was in 2005.  The June 2007 estimates by the Federal Government’s Bureau of Labor and Statistics calculated an 0.5%  increase in food prices vs. the prior month, and this was the 6th consecutive month where the food index exhibited an increase (the June energy index decreased vs. May).  Further, for the first half of the year, the food index increased 6.2%, and contruibuted to approximately 17% of the total Consumer Price Index for this period.

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This entry was posted on Tuesday, July 31st, 2007 at 9:57 am and is filed under Agriculture, Biofuels, Global Commodities, Grains. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.