US Corn Reserves Fall

First it was Russia's worst drought in decades, then it was Pakistan that had their crops decimated by historic floods, next up was Australia's "biblical" flood that messed up their harvest, now floods in Brazil that may impact their crop production, then last week it was announced that Texas and Oklahoma are the driest since the dust-bowl conditions of the 1930's.....so it should come as no surprise when we see this headline come out yesterday;

US corn reserves expected to fall to 15-year low

ST. LOUIS – Rising demand for corn from ethanol producers is pushing U.S. reserves to the lowest point in 15 years, a trend that could lead to higher grain and food prices this year.

The Agriculture Department on Friday left its estimate for corn reserves unchanged from the previous month. The reserves are projected to fall to 675 million bushels in late August, when the harvest begins, or roughly 5 percent of all corn consumed in the United States. That would be the lowest surplus level since 1996

See it here; http://news.yahoo.com/s/ap/20110408/ap_on_bi_ge/us_crop_size

We already know that food prices are increasing at rates we haven't seen in decades because corn, corn starch and corn sweeteners are used in virtually everything we eat and drink...and it looks like the increases are set to continue based on this article.

I talked to a farmer yesterday who heard that farmers are contracting $7 per bushel for delivery this fall.

So what are are we smart people doing in America with all of our corn crop?  Using 40% of it to make ethanol to burn in our cars.

The limited supply is chiefly because of increasing demand from ethanol makers, which rose 1 percent to 5 billion bushels. That's about 40 percent of the total crop.

Wow!  We may be the first civilized society who put ourselves into a self-induced famine because we burned all of our food...to make ethanol...to burn in our cars and trucks!

And if that isn't crazy enough....our Federal Government is paying $billions to the ethanol producers in the form of subsidies....money that they had to borrow from China, Japan and other foreign governments.

Nice!!