Further spike in food costs expected because of Iowa floods

Lost crops could cause a dramatic increase
By Tim Jones
Chicago Tribune correspondent
2:47 PM CDT, June 15, 2008

Get ready for food prices to shoot up again.

Even though disaster assistance workers will have to wait for high water to subside across millions of acres in Iowa before assessing the damage from the state's worst flooding in more than half a century, the numbers linked to lost crops are already coming in, creating their own floodlike pressure on food price inflation.

The bushel price of September corn, which already had reached record levels, jumped another 11 percent last week, fueled in part by news that 10 percent of Iowa's corn crop—about 1.3 million acres—has been lost to flooding or the inability to plant because of poor weather. Soybean losses, according to the Iowa Farm Bureau, are about 20 percent, or about 2 million acres.

It's too soon to say what the price impact will be, according to analysts, but dramatic production cuts in two key commodities increase the likelihood that consumers will be paying more for milk, meat, bread and poultry. Perhaps a lot more.

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