Drought threatens U.S. food prices

A drought in the Corn Belt and elsewhere in the Midwest has pushed the bushel price of corn up about 27 percent in the past month alone, and there is little sign of rain in the near future, a forecast that could soon push up food costs across the country, meteorologists say.

Concerns arise as the crop approaches pollination, a particularly sensitive two-week period when bad weather can inflict significant damage.

“You only get one chance to pollinate over 1 quadrillion kernels,” said Bill Lapp, president of Advanced Economic Solutions, a Omaha-based commodity consulting firm. “There’s always some level of angst at this time of year, but it’s significantly greater now and with good reason. We’ve had extended periods of drought.”

Corn is among the most valuable of U.S. crops, and its price has ripple effects across a wide range of food prices.

In less than a month, the future price of a bushel of corn has risen from $4.99 to $6.33, Lapp said. The supply of corn in the United States, meanwhile, is down about 8 percent from last year, according to Agriculture Department statistics.

The area affected by the drought is a swath of the Midwest that reaches as far west as Kansas, as far south as Arkansas and as far east as Indiana, according to the National Weather Service, and the dry conditions have come on fast.

Last week, about 19 percent of the contiguous United States was facing drought conditions characterized as severe or worse. This week that percentage had grown to 24 percent, according to federal forecasters.
http://www.washingtonpost.com/business/economy/drought-threatens-us-food-prices/2012/06/27/gJQAzNZd7V_story.html