(I haven't hunted, just a quick glance around.)

Perhaps a simpleminded suggestion, but were the increased food costs corrected for increased shipping/delivery costs at various stages of production due to gasoline/diesel price spikes?

If the commodities futures *sentiment* just happened to change because of bio-fuel concerns at the same time the food prices were steadily climbing due to fossil-fuel costs, it's easy to imagine a brief but dramatic bubble forming.

... I don't think that McCain's plan to give investors even more money to play with is going help make our lives better. The more money they have, the worse they can screw things up.

The agricultural commodities metioned are substitutes for oil and as such it should be expected that their prices move in tandem with the good of which they are substitutes.

No one was making biofuel out of rice. Rice is what went super expensive this last summer.

So the premise is that the price of corn follows the price of oil because it is seen as an oil substitute with regard to biofuels. I don't know that I agree with that view, but that the crash in oil prices has caused a crash in corn prices does not negate this hypothesis. Rather it lends credence to it, demonstrating the connection between the two.

After all, if oil demand has changed but food demand has not changed, and prices for both commodities have dipped, then it must have been only oil demand that had the effect on corn prices. There may be other explanations for the corn crash, but given the data in the article, this seems the only rational conclusion.

I'm not equipped to comment on the influence of biofuel production on corn prices--although surely biofuel production has some influence on those prices.

But, a couple of other things come to mind.

First, hedge funds have been investing in commodities very heavily over the last three years. along with all those nasty mortgage derivatives. Many equity funds have had to sell their high-value assets in basic resources to cover their stupendous losses in the derivatives markets . This panic-selling, as much as anything, has driven down commodity and energy prices in the near-term. In fact, you could make an argument that this selling has been so wide-spread, and so deep, that even the pressure of bio-fuel production did nothing to stop the current slide in energy and commodity prices.

These guys didn't sell their resources investments because they wanted to, because they thought the market for resources was exhausted. Quite the contrary. I'm sure they DIDN'T want to sell those assets at all. But they had to. They had no other choice. And once the sell-off began, it fed itself, and suddenly no-one wanted to be stuck with a declining asset...and so, we see oil at 62 bucks a barrel.

Also worth noting that a spiral down in energy prices and food prices simultaneously makes a certain amount of sense. Much of the cost of food comes from fossil fuels. The two things are connected so intimately in our current political economy that a fall of one practically guarantees the fall of the other, bio-fuel production notwithstanding.

What IS certain, is that this steep drop in the price of basic resources is short-term. Nearly half the world's population lives in India and China. And they want what we have. There is just one way to get what we have: massive energy consumption. Massive food consumption. Massive resource depletion. So, if you have a little cash handy, putting some of it in fossil-fuels, other commodities, and basic resources in general, is not a bad idea. Oil ain't stayin' at 62 bucks a barrel, of that you can be sure.

Oh, and let's not forget that with all this cash sloshing around in our markets, once the banks remember what to do with cash, and once investors remember too, we may see signficant inflation. Which means the cost of basic resources will rise. And rise quite fast, very likely. There's an argument to be made that the mis-use of the last pile of cash sloshing around in our financial system caused the current mess...cash that is now gone. Liquidated in Wall Street's most recent Ponzi scheme. Fear not, the next pile of cash will do its work, just as the previous pile did.

And, finally, note that US consumes something like 25% of all fossil-fuel production in the WORLD. This recession is merely a little pause for breath, before we keep right on doing what we've been doing...until there is no more.

excuse me, WTF!?, is an old market term. what ya got here is just supply and demand, fantasy vs. reality. hey, prices go up--we're on a tear--prices go down, blah, blah. Mr. Market is an evil boss, but must be obeyed. try to trade the whims of the street, good luck. just stick with the charts and turn off all the stupid news. (news is basically somebodies advertising dept. bs).

good luck, buy the bottom, sell the top, don't be a schmuck.

Nazdagg may be right, in fact, I believe he has to be right. In the long run, supply and demand must set prices. However, we spend an awful lot of time in the interim short duration where prices have little or nothing to do with supply and demand at all, but are instead driven by speculative greed.

There are two markets - the real market and the make-believe market, and the make-believe market has taken over. Instead of money flowing from consumer to producer in virtuous cycles, it flows to third parties completely outside of the loop; and we end up with titanic credit imbalances like we're experiencing today. And no, when prices return to appropriate real market levels, capital does not slosh around back to where it should be.

Part of me thinks Wall Street should just be shut down altogether. However, in theory, when things work right, the free flow of capital lubricates the economy, and that's a good thing. But there has to be a better way. Perhaps we need to stop rewarding people for short term thinking. If you take possession of a stock, you have to hold it for at least sixty days, say. Maybe longer. Really. Just as with mark to market accounting - why should the value of a publicly traded company or commodity rise and fall according to the speculative whim of short term market manipulators?

The problem is, nobody wants to address the real issues, because everybody these days is an investor. A speculator contributing to the problem.