NEW YORK (Kyodo) Recent surges in U.S. corn futures are expected to directly hit American and Japanese consumers with higher prices for steak, pizza, ice cream and tofu, according to Japanese and U.S. grain traders.
There are growing concerns among American consumers that rising animal feed and food material prices will jack up a variety of foods. Higher food prices in turn would force consumers to pay more at supermarkets and restaurants.
The soaring corn prices stem in part from a surge in demand for ethanol, an energy source alternative to gasoline, amid global efforts to cut back on emissions of greenhouse gases. Ethanol is typically produced from corn and other grain products.
“Active purchases of commodities, including corn, by investment funds for the last few years have also helped lift corn prices,” said Atsushi Morinaga, manager of the grain feed and oilseeds department at Mitsui & Co. (U.S.A.) Inc.
“It’s certain that these factors will contribute to higher prices of a variety of products in Japan,” he said.
“Higher crude oil prices lead to a rise in operating costs at a number of manufacturing factories. Looking at our familiar products around us, prices of trays and wraps for displaying products at supermarkets will go up,” Morinaga said. “Makers would have no choice but to raise prices of their products if they find it impossible to cope with higher prices with their streamlining efforts.”
Japan imports around 16 million tons of corn, making it the world’s largest importer, with 95 percent coming from the United States. This makes it inevitable that Japanese consumers will be affected by higher corn prices there.
Of the total imports from the U.S., around 75 percent is used as animal feed and the remainder as food materials, including starch. Corn starch is used in a wide array of foodstuffs, such as tablet pharmaceuticals, fish paste and ice cream as well as beer.
As a buffer, Japan has a fund aimed at preventing feed prices from soaring.
“Japanese livestock farmers, however, now see it as hard to keep the prices of their products unchanged,” Morinaga said. “They would go bankrupt should prices of their products be left unchanged, although it’s extremely difficult to forecast exactly when the prices will be raised.
“The rise in starch prices is also likely to force beer makers to pass higher prices of corn starch onto their products,” he said.
Driven partly by a decline in stocks and partly by projected poor harvests, benchmark corn futures surpassed $3 a bushel (about 25 kg) on the Chicago Board of Trade in mid-October. The key futures have since kept on rising and exceeded $4 in mid-January.
On Feb. 22, they came close to their all-time high set in July 1996.
“The key corn futures will move between $3.50 and $4 for the coming months,” predicted Junichiro Yamaguchi, director at the Chicago Center of the Japan External Trade Organization.
“Corn for use in food, feed and fuels faces a shortage across the board, thus lifting prices,” said an official with a U.S. commodities futures investment firm.
U.S. food manufacturers are increasingly worried about soaring corn prices. In January, major U.S. meatpacker Tyson Foods Inc. indicated the possibility of passing rising corn prices onto its products.
Chief Executive Dick Bond said at a teleconference for investors, “Companies will be forced to pass along rising costs to their customers, meaning consumers will pay significantly more for food.”
Coca-Cola Co. said in March it has been faced with price increases for corn and high fructose corn syrup, unlike those seen in many years.
“We’re clearly starting to feel the pinch and it’s been tough,” said Scott Young, a Coca-Cola food service division executive.
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