Biofuels Demand Driving Corn & Soybean Price Spikes

John Davis

graintraders.JPGCorn and soybean prices have gone to record levels as producers struggle to keep up with food and biofuel demands. says a new U.S. government report prompted traders to push soybean prices to a record of about $13 a bushel while corn prices hit an 11-year high of $4.95 a bushel:

The world soybean harvest will fall 6.5 percent this year, U.S. corn inventories will be 20 percent less than estimated a month ago, and wheat farmers in Kansas and Texas planted less even as the price of the grain doubled, the Department of Agriculture said in separate reports today.

“We can’t grow our way out of this grain-shortage hole,” said Jim Gerlach, president of A/C Trading Inc. in Fowler, Indiana. “We’ll have to price our way out. I’m bullish until further notice. We’ll see ups and downs, but the trend will remain higher.”

What this ultimately means for ethanol and biodiesel producers is a high cost for feedstocks, cutting into already tight margins for biofuels. Ironically, it’s the success of the green fuels that is driving up the cost for what makes them.

Biodiesel, corn, Ethanol, News