Commodity price inflation

I've written about this topic a number of times in the blog, but  two interesting articles just appeared this week.  One in the Wall Street Journal explains how the increases jump across categories:

It's getting pricier to throw some ribs and burgers on the grill. And you can blame the surging price of corn. That's because much of the corn grown in the U.S. is used as animal feed. And "we're using $6 corn to feed hogs right now," up from about $4 last year... So if you "want barbecue ribs," he adds, "you're going to have an extra $10 attached to it."...

The United Nations' Food and Agriculture Organization's monthly Food Price Index, which monitors the monthly change in a basket of commodities including meat, dairy and sugar, rose for the sixth straight month in December to its highest level since 1990....

In some cases, prices may not rise, but you will see fewer discounts or get less for your money. For instance, because of sugar prices' 30-year high in late December, packages are expected to shrink to a four-pound bag, from a five-pound bag, Mr. Swanson says. "You're getting 20% less" for the same price, he says....

Cotton futures prices skyrocketed 92% in 2010, thanks to growing demand as well as floods in Pakistan and heavy rains in China that damaged crops... Retail prices of jeans are expected to increase this year by 4.3%, socks 2.7%, sweatshirts and sweatpants 2.4%, polo shirts 2% and T-shirts 1.8%, according to industry group Cotton Inc.

Mens' clothes, in particular, are expected to get a bigger price bump because more of the garments contain cotton (compared with apparel for women and children) and they're a heavier weight with a higher cotton content....

And an article at the Guardian suggests that it's not just bad weather and increased demand that increases commodity prices. There is also pressure generated by speculators:

The same banks, hedge funds and financiers whose speculation on the global money markets caused the sub-prime mortgage crisis are thought to be causing food prices to yo-yo and inflate. The charge against them is that by taking advantage of the deregulation of global commodity markets they are making billions from speculating on food...

When this process of "hedging" was tightly regulated, it worked well enough. The price of real food on the real world market was still set by the real forces of supply and demand. But all that changed in the mid-1990s. Then, following heavy lobbying by banks, hedge funds and free market politicians in the US and Britain, the regulations on commodity markets were steadily abolished. Contracts to buy and sell foods were turned into "derivatives" that could be bought and sold among traders who had nothing to do with agriculture. In effect a new, unreal market in "food speculation" was born...

...the markets are now heavily distorted by investment banks: "Let's say news comes about bad crops and rain somewhere. Normally the price would rise about $1 [a bushel]. [But] when you have a 70-80% speculative market it goes up $2-3 to account for the extra costs...

Last year, London hedge fund Armajaro bought 240,000 tonnes, or more than 7%, of the world's stocks of cocoa beans, helping to drive chocolate to its highest price in 33 years. Meanwhile, the price of coffee shot up 20% in just three days as a direct result of hedge funds betting on the price of coffee falling...

More at the link.  Sounds like the plot of a Frank Norris novel I read in college.