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Ethanol and Global Food Prices at GrainWorld 2011

02 March 2011

CANADA - The effect of US ethanol policy on global commodity markets and food prices weee the focus of a keynote speech at GrainWorld 2011, Canada's leading annual grain-industry conference.

Bill Lapp, president of Omaha-based Advanced Economic Solutions, delivered the luncheon address, "Driving on an Empty Stomach."

He explore how American ethanol production has driven recent global price spikes for grains and oilseeds and how this has influenced food inflation around the world.

"Ethanol has enjoyed significant government support in the U.S." Lapp said.

"While there has been push-back from some significant special-interest groups – including food manufacturers, livestock producers and even environmental groups – the political support behind ethanol is strong. At some point, this will need to be weighed against the dramatic increase in food costs caused by rising grain prices and ethanol."

A host of conference presenters examined various aspects of world commodity markets that affect Canadian exports and world food supply, the focus of intense media attention due to dramatic price increases and the connection to unrest sweeping North Africa and the Middle East.

The theme of the conference that took place this week, "Flight to commodities: Smooth ride or turbulence ahead?", refers to heightened recent activity and volatility in agricultural commodity markets – driven by factors including strong demand, extreme global weather, an influx of capital and the global economic crisis.

Scotiabank's Carlos Gomes examined the Canadian and global economy; Geoff Stone of Export Development Canada shares insights on the overall commodity market; while Royal Bank economist Paul Ferley provided an outlook for Asia-Pacific.

Key market outlooks were delivered for various agricultural export commodities – including the first CWB wheat and barley outlooks for the 2011 western Canadian crop.

TheCropSite News Desk

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