Jun 12, 2008 5:06 pm US/Central
Spring Storms Lead To Rise In Food Prices
Tornadoes And Floods Damaging Crops Throughout Midwest
(CBS)
The flooding and tornadoes that have been wreaking havoc across the midwest are going to be felt all over the country in higher food prices.
CBS 2's Derrick Blakley reports that across the Midwest, from Polk County, Iowa to Hazelton, Ind., raging floodwaters have devastated farmers' crops.
Just ask Indiana farmer Nathan Burbrink. "We've lost 90 percent of our corn crop, all of our bean crop, 90 percent of our wheat crop, 50 percent of milk production from cows."
The markets have reacted to all the devastation. At the Chicago Board of Trade on Thursday, corn prices hit an all-time high for the sixth straight day.
Vic Laspinasse with grainanalyst.com said, "We've never been this high before and if the weather stays unfavorable, which is to say wet, we'll probably continue to go even higher yet."
Roy Huckaby, a grain analyst with Linn Group, said "I think we've lost about 2 million acres of corn production."
The farmers' loss is the consumers' pain; because corn feeds both farm animals and humans, higher prices have widely boosted food costs.
Egg prices are up 35 percent, milk prices are up 13 percent in a year, butter prices are up 8 percent. Brace yourself for sharply higher meat prices, too.
"I think it's going to be very expensive to feed animals. I think you're going to see a lot of people liquidating herds. So buying a steak six months from now will be a lot more expensive than it is today," Huckaby said.
Meantime, shoppers have already started adjusting. Carol Dewitt said, "I buy things on sale and I have coupons."
Some consumers have switched to lower cost foods. Over the last three months, sales of Spam jumped 10 percent compared to last year.
It's simple economics; when supply goes down and demand goes up, prices rise and that's exactly what's happening with corn.
U.S. corn production is expected to drop ten percent this year, while corn use in ethanol and demand from China keeps rising, further contributing to a rise in corn prices.
(© MMX, CBS Broadcasting Inc. All Rights Reserved.)
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