Looks like lots of people (including me) may have spoken too soon in hoping for a near term easing of food prices. Notwithstanding recent causes for good cheer on wheat and rice, the extreme weather that the US mid-west has been experiencing over the last week or so spells devastation for the corn and soya crops. Corn’s now at $7 a bushel – up from $4 a year ago – and many (“if not all” – Citigroup) small and medium sized ethanol distilleries are likely to have to shut down. The NYT paints a picture of how bad:
Dave Timmerman’s small farm has been flooded four times in the past month by the Wildcat Creek, a tributary of the Cedar River which overflowed its banks at a record 31 feet last week, causing catastrophic damage in nearby Cedar Rapids and other eastern Iowa towns and farmsteads.
“In the lean years, we had beautiful crops but they weren’t worth much,” Mr. Timmerman said, surveying his farm, which his family has tended since his great-great-grandfather. “Now, with commodity prices sky high, mother nature is throwing us all these curve balls. I’m 42 years old and these are by far the poorest crops I’ve ever seen.” And he added, “It’s going downhill by the day.”
All of this will mean a sharp fall in production of corn-based ethanol, and the potential for political intervention. But what form – and with what long term effects? One to watch over the next week or two…
