Corn Shortage Could Raise Food Prices and Demand for Wheat

 NEW YORK CITY -- Food prices are expected to rise as the corn surplus shrinks due to a hot summer, which likely scorched this year's corn crop.

Despite the near-record crops farmers planted, the Sacramento Bee reports that high temperatures stunted the plants, leading the U.S. Department of Agriculture to lower its forecast on the corn surplus to 672 bushels by next summer.

Because corn is an ingredient in everything from animal feed to soft drinks, the shortage could drive food prices higher. It takes about six months for the price hike to reach grocery stores, according to the Sacramento Bee.

"We just didn't have a good growing year," Jason Ward, an analyst with Northstar Commodity in Minneapolis, told the Associated Press. "It was too hot, too warm, too dry at the wrong time."

The dip in corn production affects more than just the price for a bag of tortilla chips. With numerous consumers driving record global demand, stocks are expected to fall to extremely low levels by next summer, according to the Financial Times.

"The corn market continues to remain incredibly tight," Chad Hart, an economist at Iowa State University, told the Financial Times. "Typically when corn's tight, all the other grains feel it."

The Financial Times reports that U.S. wheat exports are expected to fall by 20 percent to 1.025 billion bushels this year. With corn crops burning up, farmers are turning to wheat for feed. Because corn and wheat are trading close to parity, the USDA estimates there will be a 13 percent gain in the use of wheat in livestock feed this year to 130.1 million tons, the most ever.

Wheat futures for December dropped 5.75 cents, or 0.8 percent, to $7.24 a bushel. Corn is within 9.9 percent of $7.9975, the price on June 10 for the July futures that was the highest ever for the contract, according to Bloomberg.

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