From Bloomberg:
Corn Caps Biggest Drop Since 1960 as Harvest Rises to RecordWith the high government subsidies (our tax dollars) for ethanol production (that requires more energy to manufacture and ship than it yields as fuel), something had to break somewhere. Land that was deemed to be to expensive to farm was planted and now the bubble has burst. This will be good news for Mexico -- they import a lot of corn from the USA and now their food prices will be somewhat lower.
Corn fell, capping the biggest annual drop since at least 1960, and wheat tumbled the most in five years as grain production climbs to records worldwide and outpaces demand for food, livestock feed and use in biofuels.
Corn plunged 40 percent in 2013, the most among 24 commodities in the Standard & Poor�s GSCI Spot Index, as the U.S. harvest rose to a record, recovering from the prior season when crops were hurt by the worst drought since the 1930s. Farmers worldwide are producing record amounts of everything from soybeans to wheat, leaving food costs tracked by the United Nations 13 percent below an all-time high reached in 2011 and spurring banks including Goldman Sachs Group Inc. to predict further declines in crop prices in 2014.
�We�ve moved from a deficit environment to a surplus environment with big crops in the U.S.,� Chris Gadd, an analyst at Macquarie Group Ltd. in London, said by telephone today. �Rather than trying to ration demand, the function of price now is to try and find demand.�
