Market News

Ethanol Popularity Increases Food Prices

Conversion of corn to ethanol is raising food prices while delivering dubious energy benefits, according to Jeff Rubin, chief economist at CIBC World Markets. Corn prices have rocketed by 60% in the past two years as United States producers have expanded capacity. Rubin said that next year food inflation will hit the 5% mark and in 2009 it will approach 7%, its highest level in more than 25 years. "Soaring corn prices not only pass directly into animal feed costs and corn-based food prices like tortillas, but they are having an impact on other grain prices as farmers attempt to expand corn production at the expense of other crops," said the economist. Source: Canadian Grocer E-Newsletter, Oct. 31, 2007