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The Wall Street Journal: CORN SCRAMBLE

15 January 2007

Fears are growing that the growing ethanol boom might severely limit the availability of corn, which is not only a staple food ingredient in many countries but is also widely used as feed in the poultry and livestock sectors. Not only could poorer consumers be prices out of the market, the move could increase food prices generally.

In Mexico, where some lawmakers are calling for price controls, incoming Economy Secretary Eduardo Sojo, who sees increased diversion of U.S. corn toward ethanol production and away from Mexico’s consumer market as a major factor in higher prices, wants to help farmers increase production. Mexico’s Federal Competition Commission is looking into allegations that major companies were price gouging and reaching deals that were contributing to the shortage of corn.

On Friday, Chicago Board of Trade corn futures jumped after the release of several U.S. Agriculture Department reports noting lower-than-expected 2006 production and inventory data. Most-active March corn jumped 20 cents to $3.965 a bushel, its daily exchange-imposed price limit.

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