If you step past the headline and read the meat of the article, the following is noteworthy ...
(snip)" Corn is up 16 percent from a year ago on concern about the drought and increased demand from investors seeking better returns than stocks and bonds. The biggest boost for corn in the U.S. is coming from ethanol, which the government mandated be used as a gasoline additive.
Ethanol Demand
Ethanol demand will boost U.S. corn use 34 percent to 2.15 billion bushels in the year that begins Sept. 1, up from a record 1.6 billion this year and a 62 percent jump from 2005, the U.S. Department of Agriculture estimates.
U.S. ethanol production jumped 21 percent to 12.1 million gallons a day in April, according to the Energy Department. Ethanol makers are earning $6 of profit on every bushel of corn they process, according to data compiled by Bloomberg. "(snip)
What the article doesn't specifically say is that other products which use corn as a raw material are already faced with a 16% increase in corn costs and will attempt to raise prices accordingly. In the case of corn, this will translate into significant price increases for beef (which are usually corn fed), beer / whiskey (which are usually distilled from corn), and lots of other products besides corn flakes ! This is likely to be particularly painful to 'Joe Sixpack' , whose steady diet of beef and beer is about to become notably more expensive !



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