U.S. consumers may pay higher prices for food on surges in corn, soybeans, wheat

U.S. consumers may pay higher prices for food on surges in corn, soybeans, wheat : NEW YORK - U.S. consumers may pay higher prices for food “over the next few months” after recent surges in corn, soybeans and wheat, said Ephraim Leibtag, a food economist at the U.S. Department of Agriculture.

Food companies will face “challenges” passing on higher commodity costs because U.S. consumers are still recovering from the recession, Leibtag said on Thursday in an interview on Bloomberg Television’s “Bottom Line” with Mark Crumpton. The USDA may “revisit” its estimates for 2011 food inflation this month, after leaving its forecast unchanged in January at 2 percent to 3 percent, he said.

We’ve already seen some signs of inflation at the retail level, and given where the commodity markets are now in corn and soybeans and wheat, we’re going to see higher food prices and inflation accelerating over the next few months,” said Leibtag, who works for the USDA’s Economic Research Service in Washington.

Corn, wheat and soybean prices have climbed to the highest since 2008 after drought in Russia and Eastern Europe, floods in Australia and Canada and hot weather in the U.S. curbed supplies in the past year. Yesterday, the USDA cut its forecast for U.S. corn inventories to a 15-year low.

Global food prices rose to a record in January on higher dairy, sugar and cereal costs, the United Nations said Feb. 3.

Price Increases

General Mills Inc., the maker of Cheerios, raised prices on some cereal products in November in response to surging ingredient costs, and CEO Ken Powell said Feb. 1 that commodity prices may continue rising by 5 percent annually.

J.M. Smucker Co. said Feb. 8 it would boost prices on Folgers and Dunkin’ Donuts coffee. McDonald’s Corp., the world’s biggest restaurant chain, said Jan. 24 that it probably will raise prices this year.

Food inflation has helped spark unrest in Tunisia and Egypt, where protesters have been demanding that President Hosni Mubarak step down. North African and Middle Eastern countries including Algeria, Morocco and Iraq have stepped up grain purchases in recent weeks to bolster stockpiles.

Surging agricultural exports “have an impact” on domestic food prices by boosting costs for food companies, Leibtag said. U.S. farm exports probably will jump to a record $126.5 billion in the year that began Oct. 1, the USDA said in November. As of Feb. 3, soybean shipments to China, the world’s largest consumer of the oilseed, had surged 24 percent since Sept. 1, compared with the same time last year, USDA data show. For the latest updates PRESS CTR + D or visit Stock Market news Today

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