Corn prices have surged to a 10-year high on strong demand for ethanol, which is an environmentally friendly fuel and can be mixed with petrol.
The high corn prices have hit Mexicans especially hard, and has meant that many people have been paying 25% more for corn-based tortillas, a key staple. Bad weather conditions have also affected other crops worldwide. In Australia, drought has hurt wheat output, while in California cold nights are threatening citrus fruit harvests. Wheat prices hit a decade high in Australia last year, with some analysts now warning that world bread prices will rise as a result. In California, citrus fruit growers could lose some $800 million (€618 million) from a total $1.3 billion (€2.4 billion) winter harvest following unusually cold nights, according to agricultural officials. The unseasonable weather means that as much as 70% of fruits may have been destroyed on the tree by freezing temperatures - the state usually benefits from mild weather all year round.
Ethanol is an additive that can be combined with petrol and is billed as a more environmentally friendly fuel, as well as being easier to produce and therefore a more secure source of energy. Corn futures were trading 20% higher in electronic trading at the Chicago Board of Trade - the maximum limit for an increase in price during a single trading session. Corn was trading at $4.13 a bushel, a rise of 16 cents, on Tuesday morning. Mexico's President Felipe Calderon has said that he would look at ways of importing cheaper corn to help ease the problems caused by the higher prices. Last week, Mexico's government gave the go-ahead for duty-free imports of 650,000 metric tons of corn to ensure tortilla prices would be prevented from rising too much. But economy minister Eduardo Sojo said the lower prices would take time to come into effect, with the duty-free imports not due until February. (BBC NEWS)