The drought scorching the Midwest has forced the closure of traffic on the Mississippi River, and the Agriculture Department has said food prices may rise as a result of crop damage.
The unrelenting heat also prompted the Chicago Board of Trade to expand daily futures price limits when trading resumed on Wednesday.Traders estimated that orders to buy 40 million to 45 million bushels of corn futures were unfilled at the close on Tuesday and predicted prices would again advance to the daily trading limit.
The Army Corps of Engineers, the agency responsible for America's extensive waterway network, has closed the vital Mississippi River around Memphis, Tenn., for at least 24 hours to deepen and widen the shipping channel for barges.
Meanwhile, corn and soybean prices quickly reached their allowed daily limit in Chicago futures trading, with the gains matching the hike in temperatures throughout the Midwest.
The Agriculture Department also said retail food prices are likely to rise more than projected this year due to the crop-killing drought.
"If the drought continues, food prices will rise, but the increases are likely to be moderate. The effects of such higher food prices on the overall rate of inflation would be negligible," the department said.
Food prices are projected to increase between 3 percent and 5 percent in 1988 if the drought persists, compared with an increase of 2 percent to 4 percent forecast earlier.
Cash prices for staple grains in the wholesale markets have risen 35 to 40 percent since early May.