Corn, soybean prices to rise since floods swallowed crops

NEW YORK — Raging Midwest floodwaters that swallowed crops and sent corn and soybean prices soaring are about to give consumers more grief at the grocery store.

In the latest bout of food inflation, beef, pork, poultry and even eggs, cheese and milk are expected to get more expensive as livestock owners go out of business or are forced to slaughter more cattle, hogs, turkeys and chickens to cope with skyrocketing costs for corn-based animal feed.

The floods engulfed an estimated 2 million or more acres of corn and soybean fields in Iowa, Indiana, Illinois and other key growing states, sending world grain prices skyward on fears of a substantially smaller corn crop. The government will give a partial idea of how many corn acres were lost before the end of the month, but experts say the trickle-down effect could be more dramatic later this year, affecting everything from Thanksgiving turkeys to Christmas hams.

Meanwhile, it appeared Sunday the flooding in Missouri and Illinois could soon give way to recovery. The National Weather Service said the Mississippi was cresting Sunday at Canton, Mo., not far from the Iowa state line, through the lock and dam near Saverton, about 100 miles north of St. Louis. Crests were forecast for Monday in Louisiana.

Rod Brenneman, president and chief executive of Seaboard Foods, a pork supplier in Sawnee Mission, Kan., that produces 4 million hogs a year, said high corn costs were already forcing producers in his industry to cut back on the number of animals they raise.

"There's definitely liquidation of livestock happening," and that will cause meat prices to rise later this year and into 2009, said Brenneman, who is also the vice chairman of the American Meat Institute.

Brenneman's cost for feeding a single hog has shot up $30 in the past year because of record-high prices for corn and soybeans, the main ingredients in animal feed. Passing that increase on to consumers would tack an extra 15 cents per pound onto a pork chop.

It's a similar story for U.S. beef producers, who now spend a whopping 60 percent to 70 percent of their production costs on animal feed and are seeing that number rise daily as corn prices hover near an unprecedented $8 a bushel, up from about $4 a year ago.

"This is not sustainable. The cattle industry is going to have to get smaller," said James Herring, president and CEO of Friona Industries, based in Amarillo, Texas, which buys 20 million bushels of corn each year to feed 550,000 cattle.