Using the Backyard Grill This Summer Just Got More Expensive

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Just when it seemed like it couldn't get much worse on the price front – how can you top $4 a gallon gasoline? – comes news the cherished summer barbecue is about to get more expensive.

Contracts for future deliveries of corn, soybeans and wheat prices surged to the most permitted by the Chicago Board of Trade in a single day. Corn was up 4.5%, soybeans were up 3.25% and wheat was up 5%. So far in the past year, corn prices have risen by 87%, soybeans have jumped 41% and wheat has climbed 54% -- thanks in part to bad weather in Russia and Australia, two major wheat producers. The surge in prices on the futures exchanges was in reaction to a report by the U.S. Department of Agriculture that stockpiles of corn measured at the beginning of March had fallen 15% from their levels a year ago.

Higher Grain Prices = Higher Meat Prices

The U.S. is the world's largest consumer of corn. It seems to be in nearly everything -- cereals, sweeteners and ethanol for our cars. Corn, and to a lesser extent soybeans, are also important for feeding livestock. According to the National Corn Growers Association, about 80% of all corn grown in the U.S. is consumed by "domestic and overseas livestock, poultry, and fish production." So higher prices for these commodities means that prices for beef, pork and chicken are likely to go up as well down the road.

"It looks like these reports will extend the price rally we've seen, not only for food commodities that are directly manufactured from corn, soybeans and wheat but also livestock products that depend on those commodities," says Darrel L. Good, a professor of agricultural and consumer economics at the University of Illinois.

"The real test will come this summer, when we have the highest seasonal prices, particularly of pork," he says. "It looks like those prices could be sharply higher than we have ever experienced before."

Revising the Grocery Bill Upwards

Compounding these price pressures are not only higher commodity prices, but also surging demand from foreign countries for U.S. beef and pork products. That's mainly a result of the improving world economy., especially in India and China.

Art Barnaby, an agricultural economist at Kansas State University, says the economic upswing is also producing higher demand for steak at home in the U.S. -- as families stop eating mac and cheese and other less expensive foods. Higher demand adds up to higher prices in the long run, he says, even without higher feed prices.

Just how much have beef and pork prices headed higher? Since last summer, beef has risen 27% and pork is up 32%. 'That's huge; we've never experienced cattle prices at this level," says Good.

Ephraim Leibtag, an economist at the Department of Agriculture's Economic Research Service, says his department has revised upwards its grocery price forecast for the coming year. It now expects prices to rise 4% in 2011.

"If commodity prices continue to rise or even stay at these high levels," he says, "there's an upside risk for future increases later on in the year. It could take several months before the higher commodity prices are reflected in higher meat price."

Good says the reason that corn inventories are down so dramatically is the 2010 crop was smaller than in previous years -- and that we're consuming corn at a much faster rate than last year.

Overseas Demand Also Surging

It's worth bearing in mind that it's not just American consumers who are taking on the chin at the supermarket. According to the U.N.'s Food and Agriculture Organization, food prices surged 2.2% in February over January, with the FAO's cereals index up 3.7% and meat up 2% in a single month.

The agency also warns the rise in oil prices could "further exacerbate an already precarious situation in food markets."

This is particularly true in developing countries. It was a crisis over food price hikes that touched off a wave of demonstrations in Tunisia earlier this year -- which eventually led to popular protests against governments in Egypt, Libya, Bahrain and Yemen.

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Dereck

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The entire Federal Banking System under FirstGov has been "Consumed" and "Levied" by way of a Maryland State Circuit/District Court Ruled “Appropriation and Garnishment” of all Future Earnings prior to and after 2004 against Bank Of America by way of the F.D.I.C. Regulations Prohibiting failing Banks from Merging with other failing Banks between the Dates of 08/04/08 and 10/09/09.

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May 29 2011 at 12:19 AM Report abuse rate up rate down Reply
jimh664503

The answer is simple. Eliminate the futures market. Grow food crops for food only. Forget about Co2, is very much needed for life on this planet. Without it, we would all die. Take the law making power away from the EPA. Their job should be to monitor and fine gross polluters of toxic waste, not to mandate what the toxic waste is. Leave that up to the real scientist. I really don't think a real scientist will try to tell us Co2 is bad.
Stop paying the farmers for NOT growing a crop. Sure, some will make less money. However, it is all relevant. We make less money, but the cost of living is less and the dollar is worth a lot more. It is pure economics but the idiots in Washington don't have a clue.

April 11 2011 at 5:01 PM Report abuse rate up rate down Reply
notfair

Stop feeding grain to cattle. Let them eat grass. That's what they're supposed to eat, and grass-fed is healthier anyway.

April 11 2011 at 8:57 AM Report abuse rate up rate down Reply
1 reply to notfair's comment
edstp

NO, YOU FEED THE CATTLE GRAIN. You don't neeed ethanol for fuel. They use more for fuel and never started to expand onnthe size of the crops. The govermentnpays the farmer to leave a portion of his land open not to plant which causes shortages of food and other things driving up the prices. The people who do bio fuels are also paid by the goverment to make this fuel. Soon this ends and the price will be more than gasoline. Stopp beleiving the tree huggers. They are driving us into Bankruptcy.

April 11 2011 at 11:59 AM Report abuse rate up rate down Reply
ncctomm

WHY NOT TELL THE TRUTH ABOUT ALL THE PRICES ON COMMODIES GOING UP. ITS THE GREEDY MONEY PEOPLE THAT AREN'T MAKING MONEY IN THE STOCK MARKET SO THEIR BUYING UP FUTURES COFFEE ,CHOCOLATE,WHEAT,SUGAR AND ETC. SO THEY CAN HOLD OFF THE MARKET AND RAISE ALL THE PRICES. THE SAME THING IS HAPPENING WITH THE GAS AND OIL MARKET, WHILE WE THE SMALL PEOPLE PAY THE PRICE FOR THEIR LIVING HIGH ON HOG. ALSO LOOK AT WHAT HAPPENING TO ALL THE BIG BRASS IN ALL THE GAINT CORPORAIONS GETTING HUGH RAISES AND BONUES. AMEN

April 04 2011 at 12:14 PM Report abuse +1 rate up rate down Reply
1 reply to ncctomm's comment
allamericancafe

What are the people in this country suppose to do? Everything is going up, yet pays are not. Sadly, the people of America are brainwashed to sit back and say, "Oh well, nothing we can do but go with the flow." This is a crock. Other countries have stood up for themselves, who do you think is going to stand up for the regular man?? Our government? Not likely, they care only about their own bottom line. Clearly it us up to us to start saying, enough is enough and we will NOT stand for this anylonger. The government is broken, the legal system is broken, yet those involved with it are far from BROKE. It is the common american man/woman who is broke and suffering. WAKE UP AMERICA! You have no rights left!

April 04 2011 at 10:40 AM Report abuse +3 rate up rate down Reply
1 reply to allamericancafe's comment
Art Miller

glad to see that someone knows what is going on in this world, the people of the united states have been so dumb down they are nothing but sheep. We will never have change unless we get rid of this two party gang of crooks that they vote in each election. We need riots in the streets i agree 100 percent this might bring some good results talk will only go so far then its time to fight.

April 04 2011 at 9:21 PM Report abuse rate up rate down Reply
theottoco

Blame the Chinese? God forbid that another human being would want some type of prosperity in there life. I supposes they should walk bare footed in the rice fields so you can get cheaper gas.

April 04 2011 at 9:39 AM Report abuse +1 rate up rate down Reply
1 reply to theottoco's comment
willbilson

This has nothing to do with the Chinese! It is DIRECTLY caused by requiring that 10 percent of gasoline be ETHANOL! Ethanol is made from CORN. This is so simple and obvious. This result was predicted by many wise people. But the unwise are in control.

April 07 2011 at 10:02 PM Report abuse rate up rate down Reply
cschw09

We are supplying the world with food, thats great. What I don't understand is why we have hungry people here while we support the worlds economy. How about aid to the US. If we could figure a way of seducing our own goverment to look at the people they elected then maybe we could take care of our own. How can we fix the world when we can't even take care of ourselves. Time to look in the mirror instead of the telescope.

April 04 2011 at 9:32 AM Report abuse +6 rate up rate down Reply
hattie54

Blame the Chinese( I prefer another term for them).They're building more and more factories so the demand for gas is going up worldwide.We had a surplus 'til those two fools were in the W H years ago,esp.that old crook Cheney.

April 04 2011 at 9:31 AM Report abuse -3 rate up rate down Reply
wbearl

Just what did Obama and his tree hugging fans expect? Bio Fuel just threw another buyer in the pool for grain products. Now I'm from a farm family and most of my family grows beans and corn. Most gave up raising pork or beef because it is very expensive and time consuming. Thank you Obama.

April 04 2011 at 9:28 AM Report abuse -1 rate up rate down Reply
3 replies to wbearl's comment
theottoco

Nothing makes my less hopeful for this country's future than when I read posts on AOL. We must be ashamed on how ignorant the average American is.

April 04 2011 at 9:23 AM Report abuse +5 rate up rate down Reply