For consumers feeling the pinch of higher food prices, the flooding of prime Midwest farmland will bring more bad news in supermarkets through next year.
By wiping out corn and soybean crops across Iowa, Illinois and other states, the flood is driving up prices that were already at historic highs and increasing the cost of feed for cattle, hogs and poultry.
"I have no choice: going broke or increase prices," said Heinz Kramer, who expects to have to charge more for the pork and beef that he processes at a family-owned company in La Porte City.
Pork prices could be up as much as 30 percent next year because of production cutbacks, said John Lawrence, an economist at Iowa State University. Prices of beef and poultry products are likely to be at least 10 percent higher by the end of this year, he said.
Even the Wall Street Journal has an article on soaring meat prices:
Livestock farmers and meat producers across the country have been dealing with soaring feed costs for nearly two years. Now, heavy flooding in Iowa is sending corn prices even higher. Thursday, the corn futures contract for July delivery closed at $7.27 a bushel on the Chicago Board of Trade, up about 13% from two weeks ago.
The floodwaters, grain prices, worried Wall Street debt raters and sticker-shocked consumers have combined in recent days to slice millions of dollars in value from shares of protein giants such as Smithfield Foods Inc., Tyson Foods Inc. and Pilgrim's Pride Corp.
Tyson shares perked up Thursday after BMO Capital, noting the recent slide, called the company "our favorite ag/protein idea." Tyson shares were up 5.8% at $14.47 in 4 p.m. New York Stock Exchange composite trading.
Although meat prices have been climbing of late, the meatpackers and the farmers who supply them haven't been able to offset the huge increase in grain expenses. That is being exacerbated by expected crop losses from flooding and harsh weather.
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