Friday, March 09, 2007
The early effects of the biofuels boom are being felt. Reuters reports that corn prices have doubled since last fall, a jump pegged to increased ethanol demand. That, in turn, has meant a sharp decline in beef and broiler chickens due to high feed prices. Most observers expect that, as more American farmers grow corn in response to higher prices, soy acreage in the U.S. will diminish, with the difference made up in Brazil and Argentina. Increased soy production in South America is likely to mean more clearing of the huge upland savannah and Amazon rainforest, with crops pushing cattle herds deeper into forested areas. Amazon deforestation has declined from near-record rates in the last couple years, but many experts worry the destruction will track with soy prices, which are once again on the rise.