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Originally published Saturday, June 14, 2008 at 12:00 AM

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Crops submerged, prices could soar

Floods that have inundated the Midwest could reduce world corn supplies and drive food prices higher at a time when Americans are already...

The Associated Press

NEW YORK — Floods that have inundated the Midwest could reduce world corn supplies and drive food prices higher at a time when Americans are already stretching their grocery budgets and people in poor countries have rioted over rising food costs.

The U.S. government will report later this month on how many acres of corn were lost to floodwaters. But farmers and agriculture experts already say the toll appears grim, with thousands of acres probably destroyed in the region that grows most of the world's corn.

"It's not a very good picture at all. We're looking at possibly a good reduction in acres if a lot of this crop remains underwater," said Chad Hart, an agriculture economist at Iowa State University.

The disaster has drawn comparisons to the 1993 floods that displaced thousands of people and wiped away vast swaths of the heartland's agriculture. At the time, about 18 bushels per acre of corn were destroyed, "and everybody is reporting that this year is worse," said Jason Ward, grains analyst at North Star Commodity in Minneapolis.

The most recent floods have sent corn prices soaring past $7 a bushel for the first time, up from about $4 a year ago. Prices shot to a record for a seventh straight day Friday, climbing as high as $7.37 a bushel on the Chicago Board of Trade.

Floodwaters also hurt soybean crops, sending prices to near all-time highs. Wheat, oats, rice and other food commodities were damaged, too.

And corn prices could jump further if floodwaters don't recede soon, experts say. "We've got some major price volatility ahead the weaker this crop gets," Hart said.

It's the same gloomy story for U.S. ethanol producers, who are already being threatened by high corn prices and political pressure to roll back or eliminate federal subsidies.

Citigroup analyst David Driscoll this week advised investors to sell shares of publicly traded ethanol producers such as VeraSun Energy and BioFuel Energy, driving their shares sharply down.

In Iowa, the country's top corn producer, about 9 percent of the anticipated crop either hasn't been planted because farmers can't get into their fields, or it needs to be replanted because it's waterlogged, said Roger Elmore, a corn expert at Iowa State.

"It's Noah's Ark-like conditions out there ... and if you replant now you're going to get much lower yields," said Vic Lespinasse of grainanalyst.com in Chicago.

Corn prices have shot up more than 80 percent in the last year because of rising energy prices and surging global demand for biofuel and livestock feed. But excessive rainfall in the Midwest has pushed prices up nearly 20 percent in the last month alone.

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