After a year of skyrocketing global food prices, the world is still buying and stockpiles are still shrinking. Prices are likely to keep going up.
The latest: U.S. Corn stocks are significantly smaller than previous estimates suggested, the USDA said today. That sent the price of corn shooting up once again.
Farmers are responding to higher prices by planting more corn, the USDA said. But in the short term, supplies will be tight, according to today's report.
As we noted recently, a couple key factors mean that demand for corn is staying high even as the price rises. One is growing consumption of meat among the growing middle class in Asia, which in turn means more demand for corn to feed livestock. The other is growing demand the growth for corn-based ethanol, which is supported by government subsidies.
The rise in food prices in the U.S. has been relatively slow so far: Food prices rose 2.2 percent over the past year, according to the most recent government data. That's largely due to the fact that most of the price of food in this country is driven not by the price of basic staples such as corn, but by labor and other factors.
Still, there are signs that rising global prices are starting to have more of an effect in the U.S. As the New York Times reported earlier this week, some food companies are quietly shrinking the amount of food in each package, while others are raising prices.