Even though corn is now selling for less than half of its June price, the Thanksgiving turkey that feeds on that corn costs 8% more per pound. The wheat baked into the dinner rolls is down 60%, but the rolls are up 16%. And the soybeans in all those holiday pie crusts? Down 47% since summer, but cost is 9% more, the CBS study found.

Experts say it’s because grocery pricing is about more than just commodities.

“Raw commodity costs represent about 20% of the total food bill at the grocery store. The other 80% represents all the other costs that are involved getting food from the farm to the grocery store,” said Scott Irwin, an agriculture economist at the University of Illinois.

According to the USDA, those “other costs” include:
• 48% labor
• 10% packaging
• 10% transportation
• 6% profits
• 26% other (advertising, promotion, taxes, interest and depreciation)

Supermarket chains have been trying to preserve customer visits in an effort to stop losing fill-in sales to convenience stores. Wegman’s, a regional Northeast and Mid-Atlantic grocery chain, is eating into its own profits by cutting prices 5% throughout its stores.

The USDA, meanwhile, is predicting another 5% food increase for next year, the CBS study reported.

U.S. farmers delivered a bumper crop in 2008, according to a government report released Monday that eased fears of a looming food shortage but caused commodity prices to drop.

Corn futures dropped 60 cents, or 7 percent, to close at $3.81 a bushel on the Chicago Board of Trade after the report was released. Soybeans also fell 7 percent, losing 70 cents to close at $9.66 a bushel.

Midwestern farmers delivered the second-largest corn crop in U.S. history in spite of massive flooding that ripped through Iowa, Missouri and elsewhere this summer. There were 12.1 billion bushels of corn grown for use as grain, down 7 percent from 2007′s all-time record of 13.04 billion bushels, according to the U.S. Department of Agriculture’s National Agricultural Statistics Service.

The soybean crop of 2.96 billion bushels was the fourth largest in U.S. history, up 11 percent from 2007.

News of the bounty came just six months after global commodity traders pushed crop prices to all-time highs on fears that growing demand for grain and crop-based fuels like ethanol would strain global food supplies.

Milk prices have headed south as the global economy has weakened, offering some relief for food companies struggling with dairy costs.

Potential beneficiaries of the trend could range from manufacturers like Kraft Foods Inc. (KFT) to cheese users like Domino’s Pizza Inc. (DPZ), although packaged food companies like Kraft may simultaneously feel pressure from retailers to cut prices for some of their own branded products.

A confluence of factors have helped push milk costs lower – most notably weakening economic conditions worldwide have prompted lower demand for U.S. milk exports while the high prices of recent years have ensured healthy dairy supply.

“We are going to be in a period where [milk] prices are quite low,” says Stifel Nicolaus analyst Chris Growe.

Milk prices were over $20 per hundredweight, or per hundred pounds, at the start of 2008 and finished the year flirting with the $10 level, the Western Milling Weekly Feed and Dairy Newsletter recently noted. A variety of other indicators of dairy prices are also pointing downward. In an early January note, Growe noted that cheese prices had also moved lower for 17 straight trading sessions.

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