December 17, 2007 (LPAC)--Last Friday, for the first time ever, wheat rose as much as 30 cents, or 3.1% to a price above $10 a bushel. This was double its price from a year ago. The same week, rice also jumped to a record price, as did soybeans and corn. Like wheat, soybeans have also almost doubled in price this year, and, at almost $12 per bushel, are now at the highest price in 34 years. The story of corn, which has been well-told by LPAC, began its price climb toward the end of last year, with the onslaught of the ethanol craze. According to Bloomberg News, as a result of this, American processed cereals producers Kellogg's and General Mills have already raised prices, while baked goods producer Sara Lee Corp. said it will increase bread prices for the second time in three months. Bloomberg also reports that Japan's biggest maker of soy sauce, Kikkoman Corp., is planning its first price increase in 18 years.

Headlines are filled with justifications citing a reduction of land under cultivation to drought in various places around the world. While some of these may actually be true--those related to a lack of investment in water management infrastructure, for example--one commodities trader got closer to the truth when he noted that "interest rates have been too low for too long," indicating the "disaster" was more man-made than natural. This trader, who spoke with Bloomberg News, targetted former Federal Reserve Chairman Alan Greenspan by name, saying that he "kept interest rates way too low," and started something that can't be stopped. "Inflation is starting to take over," he said, "and really, we haven't seen anything yet."