Ethanol Drives Up Food Commodity Prices

Global ethanol production is driving up prices for food commodities, from feed stocks such as sugar, to meat, said Datagro, Brazil’s biggest sugar-industry forecasting firm.

U.S. production, forecast to increase more than 70 percent by 2012, will use 37 percent of the country’s current corn supply to meet output needs, up 15 percent from 2006, Datagro said. Land for soy oilseeds is increasingly being diverted to grow corn, reducing soy supply and driving up animal feed prices, according to the company. In China, competing demand for corn from the food and ethanol industries may lead the country to reduce exports and become a corn importer, Datagro said.

“World sugar, meat, corn, soy and wheat are becoming more interdependent with ethanol,” Plinio Nastari, president of Datagro, said today at an International Sugar Organization seminar in London.

Demand for biofuels made from plants such as corn, palm oil and sugar is growing amid efforts by nations including the U.S. to reduce reliance on oil, gas and coal. Some governments are also trying to limit carbon emissions and assist farming.

Bloomberg