US ethanol drives up food prices - broker

07 May 2008 22:31  [Source: ICIS news]

NEW YORK (ICIS news)--Ethanol is a major cause of the run-up of corn prices in the US, causing a general increase in food prices, a broker said on Wednesday.

“Ethanol has no future," said Michael Cosgrove, president of Amerex Brokers, a member of derivatives brokerage GFI Group. Cosgrove was speaking at an energy outlook conference sponsored by the group.

Brazil is also contributing to the run-up on food prices, in that farmers in the nation are planting more sugarcane instead of basic foodstuffs, he said.

“You can’t turn food into fuel when people are hungry," Cosgrove said. "It’s stupid.”

The food riots in Egypt, Indonesia and Haiti are all a result of ethanol, he said.

On the other hand, Cosgrove said coal-to-fuel technology is not getting enough attention.

The coal reserves in the US state of Montana total 120bn tonnes, he said. If converted into liquid fuel, they would exceed one-quarter of the oil reserves in the Middle East.

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By: Ivan Lerner
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