CORN prices spurted to an all-time record last week.The shortages of crop, coupled with stronger international demand, took hold of trading sentiment.
The UN's Rome-based Food and Agriculture Organisation said world food prices eased slightly last month.
Its Food Price Index averaged 230 points, down just 2.9 per cent from February's peak but up a significant 37 per cent on March last year.
Vegetable oils and sugar took the heat out of the index as production outlooks in those sectors improved but cereals also weakened. That is unlikely to be the case with the next index.
Corn is one of the big factors in the overall cost of food.
It flows into the cost structures for meat processors and is a key ingredient in many processed-food systems.
US corn futures prices have hit levels previously considered completely unviable for producers feeding pigs, chicken and cattle.
But US internal feed markets aren't driving this trend. The US grains industry's peak body is worried about China's buying push.
The US Grain Council's intelligence says corn stocks in China are 10-12 million tonnes of corn lower than previously thought for 2011-12.
The Chinese are likely to step into the market for up to another five million tonnes, putting the heat on prices.
The price of oil is also on the move, adding further pressure.
US ethanol blenders can pass higher input prices down the chain to ethanol producers because crude-oil prices have risen.
A drop in the crude-oil price might be the spur for some pruning of demand and rationing of grain use in this sector.
The US grains industry is frustrated with the way China participates in markets.
The lack of transparency with corn stocks and production estimates adds to the volatility in the grain market because everyone is forced to guess and speculate what choices it might make to fill its feed gaps and what volumes it requires to provide its food industry with sufficient security.
Producers with the appropriate signals could easily crank up yields and it would allow both countries to make the most efficient use of available seed.
You have to wonder at the strategy of the Chinese in keeping the market in the dark.
It surely works when the market is on the way down or bouncing around at the bottom, as they can buy with advantage and make unpredicted purchases at good prices (as they did when the tsunami washed into the east coast of Japan last month) to sustain its food costs at reasonable levels.
But when demand is so strong and supply short, it chooses to keep things invisible, building a premium into the market by its own actions.
When inflation is already running strongly in that nation it's hard to see how this can serve China's long-term interests.