Jesse Mobley

How Important Can Corn Be



Posted: Monday, August 08, 2011

by Jesse Mobley
EconomistNow

From fueling our cars to sweetening our beverages and foods, corn plays a vital role in everyone’s lives. So it’s not shocking when firms start to get restless when there is speculation about higher prices of this essential agricultural product. Since this time last year, the price per bushel (the units that corn and other produce are sold in) has spiked more than 127%. In 2008, corn prices reached its record high at $8 per bushel but analysts say that this year’s prices could reach outwards of $9 per bushel. What is the cause? Simply put, it’s nothing more than Mother Nature.  Rain is a farmer’s best friend, but only in moderation. Over the past few months the Mississippi River Valley and surrounding plains region has been hammered with flooding as this year’s weather continues to shock even meteorologists. With flooded fields, farmers continue to get pushed back weeks from their usual planting period for corn. Only a little more than half of Ohio’s farmers have been able to start their planting process, and Arkansas is having similar problems with rice. At the same time, other parts of the country are receiving little to no rain—such widespread areas include Texas, western Oklahoma, southern Kansas, and eastern Colorado.  But what does that mean for the average American?

As mentioned before, corn prices affect just about everything that we consume or even touch. With raising the price of corn, there could be an increase in consumable corn such as food and beverages, most notably whiskey drinkers. In addition, the prices of your favorite meats, like steak or chicken, could see a similar spike because of cost of feed for farmers. Lastly, there is the possibility that gasoline could feel the crunch even though ethanol is already heavily subsidized by the government.

With the damaged crop fields equaling the size of Massachusetts, the problem is too large to ignore. With equipment idled and rain dances being our last hope for the arid West, I feel that everyone should cross their fingers and hope for a quick change of circumstances before it hits our wallets.  By and large this comes down to the classic economic model of supply and demand where shifts create change- the change in the very thing we don’t like it to be in: prices.
Jesse Mobley

Founder and Chief Editor of EconomistNow

Vice President of HopeWater LLC

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