Ethanol Not to Blame for High Wheat Prices

John Davis

Keith CollinsThe latest knock against ethanol claims the green fuel was fueling a spike in wheat prices as more growers were switching to corn acres to provide the feedstock for ethanol. But USDA’s Chief Economist Keith Collins says it just isn’t so.

This story from says Collins claims global stocks are really behind the rise in wheat:

Collins took umbrage Monday with a weekend article in the Washington Post that attempted to peg high wheat prices to the demand for ethanol and the crunch for acres.

Collins spoke to more than 200 members of the National Farmers Union Monday at USDA headquarters. The Farmers Union has its fly-in this week in which farmers will lobby members of Congress on the farm bill. He drew a line between some of the factors affecting the overall U.S. economy and agriculture.

High grain prices and higher beef, pork and poultry prices have led to more criticism linking the price spikes to higher grocery bills and tying it all back to ethanol production. Collins acknowledged it is difficult to refute that the biofuel economy has spurred higher commodity prices, but more issues than the number of acres dedicated to biofuel feedstocks have played into the current wheat price spike.

“That has nothing to do with ethanol, Collins said. “That continues to astonish me.”

Collins noted this year’s wheat crop was planted before corn prices took off. The high price of corn had no factor in wheat planting, Collins said. The key factor stems from smaller crops in Canada, the Ukraine, Australia and the European Union, Collins said.

He went on to tell the gathering that there will be more competition next spring for corn acres instead of soybean and wheat, but he says the real driver on the prices continues to be the fact that wheat stocks worldwide are at their lowest point since USDA began tracking global stocks in 1960.

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