Since September 2006, the market price of corn and soybeans has climbed significantly, and many agricultural observers point to the increased demand for renewable energy as a leading cause of the upward trend in prices. This report focuses on the factors that will impact the sustainability of the demand-driven surge in the market price of corn and soybeans, as well as the policy implications that higher market prices will have on the development of the 2007 Farm Bill. Congressional Budget Office projections of current programs establish the amount of money available to lawmakers for crafting agricultural policy. As projected pricetriggered budgetary outlays decrease, and Congress begins to function under pay-as-you-go spending rules, options for adding new spending will narrow. Forecasts of lower spending estimates will also limit the flexibility to alter program parameters like loan rates and target prices, or to introduce alternative programs such as revenue insurance. High market prices may also serve to focus policy on income stabilization rather than on income support.