As Corn Reserves Drop, Food Prices Go Higher

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If you think food prices are high now, food producers have warned the prices will go even higher.

Declining stocks of wheat, soybeans, and other staples have already caused a surge in global food prices.

An increased demand for corn has pushed reserves to their lowest levels in 15 years, reflecting tighter supplies that will lead to higher food prices in 2011. Increasing demand for corn from the ethanol industry is a major reason for the decline.

The U.S. Department of Agriculture reported Wednesday that the ethanol industry's projected orders this year rose 8.4 percent to 13.01 billion bushels after record-high production in December and January.

That means the United States will have about 675 million bushels of corn left over in late August when this year's harvest begins. That's roughly 5 percent of all corn that will be consumed, the lowest surplus level since 1996.

The price of corn affects most food products in supermarkets. It's used to feed the cattle, hogs and chickens that fill the meat case, and is the main ingredient in Cap'n Crunch in the cereal aisle and Doritos in the snack aisle. Turned into corn syrup, it sweetens most soft drinks.

Those higher prices have begun filtering into stores. Supermarkets have resisted price increases for some time, hoping to hold onto their cost-conscious customers in the tough economy. But chains such as Kroger now also say higher prices are coming.

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