The surging price of corn hit another milestone on Monday morning as the cost of global commodities continues to push higher.
The contracts for July corn futures were trading above $8 per bushel on Monday, the highest level since September 2012. The contracts were trading near $6 per bushel at the start of the year.
Corn is just one of several agriculture commodities that has seen surging prices in recent weeks, in part due to the war in Ukraine. Ukraine is a major exporter of wheat and other items, such as sunflower oil, while Russia is a key producer of wheat and many of the chemicals used in fertilizer. That is leading futures traders to bet that higher input costs and more demand for corn as a substitute food item will drive up the price.
Even prior to the war, agricultural commodities were seeing some upward pressure amid supply chain disruptions and high transportation costs that are contributing to inflation throughout the economy. Drought in the western U.S. and elsewhere in the world has also driven prices higher.
In addition to global supply concerns hitting agricultural commodities broadly, corn also has a potential source of additional demand.
President Joe Biden announced last week that his administration would temporarily allow the sale of higher-ethanol gasoline over the summer in an attempt to offset rising energy costs. Summer is typically one of the highest demand periods for gasoline in the U.S.
The rising price of corn and other food commodities are contributing to the highest inflation rate the U.S. has seen since the 1980s, leading the Federal Reserve to start raising interest rates. Some economists and Wall Street strategists are worried that, in the process of trying to slow inflation, the central bank could tip the country into a recession.
The World Bank warned earlier this month that global food insecurity was likely to rise this year due to the higher prices.