No quick fix for food costs

Implications: The causes of food cost inflation aren't about to go away.  Demand in emerging economies for a higher quality and more varied diet will increase, and ethanol production will make it more difficult for producers to respond quickly to the market. 

Analysis: According to the attached article run-ups in farm commodity prices typically happen in five-year cycles.  The question is, how long will it take the marketplace to correct this time?  The growing middle class along the Pacific rim and the demand for ethanol are issues that will contunue to complicate market processes.  Ethanol production alone will consume 1/3 of the US corn crop the this year.  

This Wall Street Journal article http://online.wsj.com/article/SB121035537803181131.html brings up an interesting point, the ethanol producers have had an easier time than food producers absorbing the price increases in corn because they have a "far easier time passing along costs". 

It's not all bad news, market presures will reduce corn production (down 7.3% this year) and increase acreage devoted to wheat and soybeans as those commodities bring higher prices.   

Diverting food crops to energy production will end up being as much a social issue as an economic one. It will take time for the market to adjust, and this will continue to impact food costs for years to come.