Dale Nething, 86, hauls a load of corn from his truck to a grain elevator on his family farm in Ravenna, Ohio on October 11, 2021.
Dane Rhys | Reuters
The rising corn price hit another milestone Monday morning as the cost of global commodities continues to rise.
Contracts for July corn futures traded above $8 a bushel on Monday, the highest level since September 2012. Contracts were trading near $6 a bushel earlier in the year.
Corn is just one of several agricultural commodities whose prices have risen sharply in recent weeks, partly due to the war in Ukraine. Ukraine is a major exporter of wheat and other items like sunflower oil, while Russia is a major producer of wheat and many chemicals used in fertilizers. That leads futures traders to bet that higher input costs and greater demand for corn as a substitute food will push the price higher.
Even before the war, soft commodities were facing some upward pressure as supply chains were disrupted and high transportation costs contributed to inflation across the economy. The drought in the western US and elsewhere in the world has also pushed prices higher.
In addition to global supply concerns affecting soft commodities across the board, corn also has a potential source of additional demand.
President Joe Biden announced last week that his administration would temporarily allow the sale of higher-ethanol gasoline during the summer to offset rising energy costs. Summer is typically one of the peak demand periods for gasoline in the United States
Soaring corn and other food prices are contributing to the highest rate of inflation the US has seen since the 1980s, prompting the Federal Reserve to raise interest rates. Some economists and Wall Street strategists fear that the central bank’s attempt to curb inflation could plunge the country into recession.
The World Bank warned earlier this month that global food insecurity is likely to increase this year due to higher prices.