Relief for consumers: prices falling

Despite the current decline in grain prices, they remain high on a historical basis. For example, corn prices are historically between $2 and $3 a bushel. They are now $5 a bushel, down from $8 a bushel. "It's kind of like calling gasoline at $3.50 a gallon cheap," Lapp says.

Rice, another key food commodity, has also declined in price. Earlier this year, rough rice was selling for as much as $25 per 100 pounds on the Chicago Board of Trade. Now, it's close to $16 per 100 pounds, a decline of 36 percent. However, it is still about 60 percent higher than it was last year at this time.

"There was real concern about the Asian crops [and] strong import demand from the Philippines. And people went into a panic mode over food security concerns," says Tom Tice, director of food grains analysis at the USDA in Washington. "Now, the panic-buying is out, and importers are waiting for the crops from Thailand and Vietnam."

The new rice crop is being harvested in Texas and parts of Southeast Asia. The rice crop from Arkansas will not come until late September, about three weeks later than normal. But, Mr. Tice says, in mid-July it appeared that the crop conditions were comparable to last year, which was a very good year. On Tuesday, the USDA will be releasing new estimates.

Even though some commodities have come down in price, some of the reductions have yet to be reflected in retail prices – for example, in copper and plastic piping. That's the case at Mayer Malbin Inc., a leading supplier of pipes, valves, and fittings in Long Island City in New York, says Jonathan Gordon, a vice president.

"We're seeing more increases, not falling prices," Mr. Gordon says. "Maybe from its high the price is down 10 percent, but we've seen price increases at the wholesale level of 40 percent to 50 percent since the beginning of the year. The basic cost to build something is so much higher than six months ago."

Even though prices are much higher in Portland, Ore., Dan O'Brien, president of Current Electrical, expects to see a "softening." "Demand is down, so they have to do something," says Mr. O'Brien, whose products include copper, aluminum, and steel.

Ken Simonson, chief economist at the Associated General Contractors of America, says he is getting reports of increases in wallboard, an essential element in the construction industry. "We've gotten several examples of increases for August, September, and October of 10 to 12 percent each month," he says. "But I find it extremely hard to believe the price increases will stick given the weak housing market."

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