Food prices expected to increase due to Iowa flood
2008-06-17 15:25:51 (GMT) (Caymanmama.com - Business News)Des Moines, Iowa (CaymanMama.com) — The flood that struck Iowa will further affect increasing inflation and food prices. Given the fact that Iowa flood has caused huge human tragedy, it seems that the flood will have a worldwide impact that goes beyond the Midwest. Throughout the nation, it seems that consumers will be paying higher prices for food items that can lead to adverse effect upon corn production.
This could be a heavy blow to the economy that will be enhanced due to the fear of inflation. On Monday, the corn futures saw a record high as various traders tried to evaluate the corn damages. This can be seen as another hard blow to an economy that is perpetually struggling amidst soaring prices.
Due to the flood, Iowa has already lost around 1 to 3 million acres of corn. This amounts to 7% to 21% of the total production of the corn as a topmost corn production state. However, with the bad weather and flood, the corn production saw a downfall of corn production. Along with this, cold weather coupled with heavy rainfall can jeopardize the corn harvest from 10% to 12% in the current year.
According to Gavin Maguire, Iowa Grain Co.’s research director, “We can’t make a final assessment until we get into June and July.” He continued, “We’re really slashing our expectations now. Maybe we’re being overly aggressive. But if July is very hot and dry, it could reduce expectations even further.”
However, the price rise is not just going to affect the prices of corn as the price rise will impact on diary products as well as meat items. Given the fact that corn is used for animal feed, reduced production of corn will lead to price. Apart from it, corn is also used in numerous other items such as soda sweetener and in ethanol as a part of non food items. Maguire said, “There’s so many uses for it. It’s even in toothpaste. It’s a product we’ve grown very dependent on.”
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