Taco night is going to get more expensive for Americans this summer as corn prices skyrocket

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  • Corn tortillas may be difficult to find this summer, as major corn producers struggle to meet demand.
  • Labor shortages and poor weather have decreased corn yields for major producers.
  • China is leading a surge in demand as it seeks to replenish its swine herd.
  • See more stories on Insider’s business page.

Taco shells will be in short supply this summer.

Corn tacos will be more difficult to find in grocery stores as demand for corn – a key product in anything from fuel to animal feed, as well as your favorite tacos – paired with supply-chain woes makes the product even more difficult to produce.

Demand for the grain has surged in recent months. Increased interest from China, as well as a combination of poor weather and labor shortages, has made the key crop an increasingly valuable commodity.

Major corn producers in Brazil and Argentina have been facing difficulty finding people to work the fields amid the COVID-19 pandemic, according to Axios. Major droughts in the countries responsible for 40% of the international corn market have also decimated crop yields, Reuters reported.

At the same time that supplies are down in major corn-producing countries, demand for the product commonly used in animal feed is spiking. China is leading the surge in demand, importing 40% more corn in 2021 than the last 60 years combined, according to an April report from the World Agricultural Supply and Demand Estimates.

The country is attempting to rebuild its swine herd after more than half of the nation’s herd was killed off by an outbreak of African swine fever in 2019, and corn feed is crucial to China’s plans to replenish it.

US farmers could see significant profit from the shortage, but unseasonably cold weather and droughts in the Midwest threatens to further diminish corn production, Axios reports.

Corn prices are at an 8-year high, rising 16% in April alone and 43.7% this year, according to MarketWatch.

Americans should “brace for higher prices” in the coming months on any corn-based products, including tortillas, senior market analyst at MOYA told USA Today.

“Corn, wheat, soybeans and even lumber prices are surging higher, and that should spell trouble in the coming months for the U.S. consumer,” Moya said.

The corn shortage is one of many food and household goods that Americans can expect to see in short supply on grocery shelves in the coming months. From surging gas prices to toilet paper and coffee shortages, the US is facing a supply-chain crisis.

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Corn prices have jumped 142% in the past year amid rising demand from China, drought in Brazil

Farmer corn field
Farmer Dan Roberts inspects his corn crop during the harvest in Minooka, Illinois.

Corn prices have jumped roughly 142% over the past year to $7.56 per bushel, the highest price seen in eight years for the crop.

A drought in Brazil and increased demand in China have put pressure on global suppliers.

According to data published on Tuesday by the US Census Bureau, corn exports increased from $2.2 billion through March of 2020 to $5.5 billion through the first three months of 2021, and in March alone, the US exported $2.12 billion worth of the crop.

China had not been a major corn importer for several years under the Trump administration, but domestic corn prices began rising in early 2020, leading to unusually large purchases from the Chinese.

Additionally, in the April 9 World Agricultural Supply and Demand Estimates (WASDE) report, the USDA revealed corn stocks in 2020-2021 hit a seven-year low of 1.352 billion bushels.

Falling supply and rising demand, coupled with a drought in Brazil, have corn prices surging globally.

Brazil’s 2020/2021 total corn crop estimate was lowered by nearly 8% to 104.1 million tonnes as dry weather continues to hurt yields in the country, forecaster Safras & Mercado reported last Friday.

“Brazil’s weather continues to provide support for the price gains. A material chunk of Brazil’s second corn crop sits in drying soils,” Tobin Gorey, director of agricultural strategy at the Commonwealth Bank of Australia, told Agriculture.com.

“The situation is critical in Brazil,” Paris-based adviser Agritel said in a report, per Bloomberg.

“This should further strain the global balance sheet, while the U.S. will have to partly compensate for the drop in South American exports,” Agritel added.

Rising corn prices have had a big impact on a number of goods including tortillas in Mexico.

CNN reported that prices per kilogram of corn tortillas are nearing $1 (20 pesos) in the country-last year national prices hovered between 9.7 and 18 pesos.

Rising commodity prices go beyond corn, with everything from lumber to copper surging and leading many economists to worry about inflation.

Mohamed El-Erian, the chief economic adviser at Allianz and president of Queens’s College, Cambridge, told CNBC on Monday that he believes inflation is here to stay and not “transitory” as the Federal Reserve claims.

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