Business is up at Uncle Sam’s Submarines - but so are costs for rolls, meats, cheeses and other sandwich ingredients.

“It’s like a chain. Vegetable oil is up and that affects a lot of the food products we use. “Wheat goes up, and that affects beef prices because it’s what (beef cattle) eat. Consumers and businesses across the country are paying more for a range of products as prices for wheat, corn and soybeans continue to go skyward. Wheat futures for May delivery gained 5.5 cents to settle at $10.475 a bushel on the Chicago Board of Trade, up from $10.27 Monday and just $5.12 a year ago. Soybeans jumped 26.5 cents to set a record yesterday at $14.18, up from $8.29 a year ago, and corn added 5.25 cents to settle at $5.20 a bushel, compared to $4.19 a year ago.

Wheat prices have hit records 16 times since September due to relatively low recent crop yields, but continued high export levels to China and other countries, experts say.

“Everybody was buying as much as they possibly could,” said Andy Spirek, assistant commercial manager with agricultural processor Archer Daniels Midland Co. of Decatur, Ill.

Costs for flour and other wheat products could level out starting in July with the new crop, expected to produce higher yields, Spirek said. “A lot of small bakeries are going out of business at these prices,” he said.

Bulk flour that costs have risen 205 percent since last February.

“Across the board, there have been price increases. Everybody has been experiencing “inflationary pressures” of close to 3 percent.

Demand for wheat is high in developing countries such as China, where more beef is being consumed. Ethanol producers are consuming more corn, and while U.S. soybean production fell last year, prices have rallied on increased demand for soy-based animal feed and cooking oil, which also is used to make fuels.

Growth in the alternative fuels industry, combined with rising demand for food, essentially has eliminated the concept of a surplus for commodities such as corn and soy, said Nathaniel Doyno, executive director of the nonprofit Steel City Biofuels, which works with local producers.

“The industry here is a little tight, and some have dropped out of the race,” he said. Going forward, the biofuels producers who succeed will be those who didn’t base their business plans on unrealistic, low prices for corn, for example, and those who embrace nontraditional feedstock materials for fuel, such as municipal solid waste, sewage sludge or agricultural waste.

For farmers, the impact of rising grain prices is mixed. Andrew Kimmel said while it’s nice to see higher prices for corn, the seed and fertilizer he uses to grow it have doubled in price in the last two years.

“We are making a little more, but it’s not a windfall either,” said Kimmel, who grows corn on 800 acres of his farm that spans the Armstrong-Indiana County border. He also grows soybeans, wheat and barley and has 200 beef cattle.

Last year, Wayne Frey of Salem, Westmoreland County, locked in a nine-month price of $200 a ton for soybean meal for his 250 dairy cows.

“Now the price is over $400,” he said, but fortunately, milk prices are 30 to 35 percent higher than a year ago. “If milk prices drop, you’ll see a mass exit out of the dairy business,” Frey said.

Source: http://www.pittsburghlive.com/x/pittsburghtrib/business/s_553229.html