Grain prices continue climb, hit record levels

"The U.S. economy may be teetering on the brink of recession. But there's a bountiful harvest down on the farm," Julie Jargon of The Wall Street Journal writes from Albion, Neb.

"Grain prices are surging to historic levels," Jargon notes. "Spring wheat, a variety often used in bread, hit a record $18.53 per bushel yesterday." Some spot-market trading in wheat this went over $20 a bushel, a level never seen before. Corn and soybeans are also "25 percent or more above their year-ago prices," Jargon reports.

"While the boom is reversing decades of decline in U.S. rural areas at an otherwise vulnerable time, it's also pushing global food costs higher. ... Here in Albion, a central Nebraska farm town of fewer than 2,000, such problems seem worlds away. People are building new, outsized homes or renovating existing ones. A new ethanol plant has created 55 jobs and a full-time dentist is on the way. A fine-jewelry store moved here in November and a coffee shop run by farmers' wives -- charging Starbucks prices in a town where coffee used to come in a Styrofoam cup -- just celebrated its first anniversary."

Jargon gives the figures: "Net farm income is expected to hit $92.3 billion in 2008 -- a 51 percent increase over the 10-year average of $61.1 billion. Across much of the Great Plains, unemployment rates are well below national figures and housing markets remain robust. Robert Moskow, a food industry analyst at Credit Suisse, has proclaimed this the 'golden age' of agriculture. The new era owes largely to a surge in crop demand from biofuels producers and the growing demand for grains in places like China and India." (Read more)