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Corn and soybeans near record prices, pushing food costs higher

The prices of corn and soybeans have risen almost to records, signaling higher food inflation in store.

Global food prices had already reached records when Russia invaded Ukraine in late February, endangering large parts of the world’s grain and oilseed supplies. Poor harvests in South America, bad plant weather in the US and rising demand for biofuels threaten to stretch stocks even thinner and push up prices.

The price of soybeans, which are fed to cows, chicken and salmon and crushed into oils, has risen 26% so far this year. Futures are traded above $ 17 per share. bush for the first time since a hot, dry summer baked American farms and destroyed crops in 2012. Until recently, the drought ten years ago was the only time that corn cost more than $ 8 per bushel. bush. Corn futures, up 37% this year, traded as high as $ 8.24 on Thursday, about 15 cents back from the highest level ever.

If corn and soybeans record new heights, they will be the latest commodities to do so in the broadest and sharpest commodity rally of the modern trading era. Vegetable oils, oats and wheat already reached records in 2022.

Corn is more than twice as expensive as before the pandemic and in most years without drought. Soybeans have also almost doubled in price.

The rise in these key ingredients spills over into the cost of producing food ranging from pork chops to Pepsi, eroding Americans’ purchasing power and adding yet another challenge to the post-pandemic economic recovery.

Food companies say customers have been keeping up so far. But analysts say there are signs, such as stronger private label sales, showing consumers reacting to the squeeze.

“The resilience we have in the industry is better than historic and better than we had planned,” PepsiCo Inc..

CEO Ramon Laguarta told investors on a call this week. “However, we believe that the consumer is very early in this process of adapting to the new inflationary environment.”

U.S. food prices in March rose 8.8% from a year earlier, according to the Bureau of Labor Statistics. A UN group said global food prices hit a new high last month and the World Bank said it expects war in Europe to boost food prices by around 23% this year, following a 31% rise in 2021, when snarling supply chains and bad weather moved agricultural commodity markets.

Corn is more than twice as expensive as before the pandemic. Corn silage is being moved to a farm in Utah.


George Frey / Bloomberg News

The Federal Reserve responded last month with its first rate hike in more than three years, raising the benchmark rate to a range between 0.25% and 0.5% and calling for further gains. Many expect the central bank to raise interest rates another half a percentage point next week.

The Biden administration does not anticipate food shortages in this country and directs aid abroad to places that may run dry, White House Press Secretary Jen Psaki said on Tuesday.

“We are carrying out really comprehensive diplomacy to encourage all countries to refrain from export restrictions and excessive storage,” she said. “It would exacerbate supply chain challenges and price inflation.”

Ukraine is a major maize exporter and there are doubts that much will be planted in the middle of the fighting or that bushes will come to international markets after harvest. The U.S. Department of Agriculture has lowered its forecasts for Ukraine’s corn exports by about 30% since Russia invaded.

The rise in soybeans has recently been driven by Brazil’s severe drought and record temperatures, which threaten to shrink the largest bean grower’s crop.

Drought is also a concern in North America due to the weather pattern of La Niña. But at the moment, it is cold, wet weather that is delaying planting in the Midwest. Only 7% of this year’s corn was planted at the beginning of the week compared to 16% a year ago, the Department of Agriculture said. Soybeans are also behind schedule.

This year, it’s just expected to be the third ever where American farmers plant more land with soybeans than with corn. Rising fertilizer prices are behind the shift. Legumes fix nitrogen in the soil and do not need to be added to the nutrient like corn does.

Consumers are becoming more aware of shrinkflation, the practice of reducing the content of a product instead of raising prices. So companies get creative. WSJ’s Annie Gasparro explains how to spot it in all its forms. Illustration: Adele Morgan

BofA Securities analysts say one way to increase food supply would be for governments to cut back on regulations requiring biofuels made from crops to be blended into petrol and diesel.

The Biden administration eased summer smuggling rules to allow higher blends of corn-made ethanol, an attempt to tame prices at the pump. Oil producers, environmental groups and meat companies feeding their animals corn were dissatisfied.

Analysts predict that the United States will use about five times as much corn to produce motor fuels this year than Ukraine typically exports in total.

“For affluent countries, the pressure on food supplies created by blending biofuels may seem acceptable, but lower-income countries would realize greater food inflation relief from even small reductions in blending,” BofA analysts wrote in a research note last week.

Write to Ryan December at

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