The flooding in Iowa will remount price pressures on corn. As the need for grain for animal feed increases, price pressures will redound to barley -- feed and malting varieties. Flex fuel prices will feel upward pressure. And so on.
Since June 6, Iowa has gotten at least 8 inches of rain, following a wet spring that already saturated the ground. As of Friday, nine rivers were at or above historic flood levels. More thunderstorms are possible in the Cedar Rapids area over the weekend, but next week is expected to be sunny and dry.
Gov. Chet Culver declared 83 of the state's 99 counties disaster areas, a designation that helps speed aid and opens the way for loans and grants.
The drenching has also severely damaged crops in America's No. 1 corn state and other parts of the Midwest at a time when corn prices are soaring. Dave Miller, a grain farmer and director of research for the Iowa Farm Bureau, estimated that up to 1.3 million acres of corn and 2 million acres of soy beans — about 20 percent of the state's overall grain crop — had been lost to flooding.
From the Wall Street Journal:
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.
Bill Lapp, an economist at consulting firm Advanced Economic Solutions, Omaha, Neb., and former chief economist at ConAgra Foods Inc., said higher grain prices brought on by poor weather will help push food prices up by 9% a year through 2012 <...>
Expectations for tighter ethanol supplies because of higher corn prices could increase demand for gasoline, in turn helping to force up gas prices. The squeeze on ethanol also could heighten calls for the federal government to suspend its requirement that nine billion gallons of biofuels be blended into gasoline by the end of this year.
To assist the displaced victims of the floods: Network for Good.