Midwest Floods Push Grain Prices Higher, Weigh on Ethanol

Posted by Truth About Trade & Technology
Monday, 16 June 2008

The Wall Street Journal
By LAUREN ETTER
Original Publish Date: June 14, 2008

The effects of flooding in the Midwest are rippling across and beyond the Great Plains, striking at the ethanol industry, hog farmers, pork producers and even catfish farms as grain prices continue to soar.

Cities in Iowa, Wisconsin, Illinois and Missouri sandbagged levees to keep them from bursting and urged residents to seek higher ground. River levels in some places have surpassed records set during a flood in 1993, considered the worst in recent history.

The entire state of Iowa is experiencing flood conditions, according to the Army Corps of Engineers. In Cedar Rapids, population 124,000, a railroad bridge collapsed, 3,000 homes were evacuated and a downtown hospital had to be evacuated. Experts say Iowa's Cedar River could crest above 30 feet -- more than 10 feet higher than its crest of 19.27 feet in 1993. Heavy rains are expected to continue across the Midwest at least through Monday, though drier, sunnier weather is forecast next week.

The flooding threatens to wipe out farms' crops of corn or soybeans, and this has pushed prices to record levels. On the Chicago Board of Trade Friday, corn prices hit a new record high of $7.3175 a bushel, while soybeans traded near record highs, closing at $15.60. Corn prices have climbed about 10% in the past week, threatening to put further upward pressure on food prices that have been climbing for a year.

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