Dueling wire services

From the Associated Press...

Midwest floods may not contribute as much to food inflation as was feared.

Corn prices fell Monday after the government surprised traders, reporting farmers tried to cash in on soaring corn demand for ethanol by planting more acres of the crop than the market expected...

Farmers will harvest nearly 9 percent fewer acres of corn this year than last year, in part because of Midwest flooding that has damaged a portion of the crop, the government reported.

But the latest USDA figures also showed that farmers had planted more than a million additional acres of corn than they had expected to plant in March, which may remove some of the inflation potential out of the floods. Corn futures prices fell in the wake of Monday's report.

From Reuters...

Levees on the cresting Mississippi River held on Sunday as the worst U.S. Midwest flooding in 15 years began to ebb, but multibillion-dollar crop losses may boost world food prices for years....

Fears that as many as 5 million acres of corn and soybeans have been lost to flooding in the world's largest grain and food exporter pushed corn and livestock prices to record highs in the last week.

The ripple inflation effect on global food prices as U.S. prices soar has alarmed everyone from central bankers to food aid groups. Fears that livestock herds will be culled because of soaring corn feed prices may push meat prices up for years.

Apparently we should believe only half of what we read, and still be very skeptical about that half, especially when it comes from notoriously unreliable news service like the AP and Reuters.

Posted by Danny Carlton at July 1, 2008 6:47 AM