The ongoing drought in the United States has ties to La Nina, National Oceanic and Atmospheric Administration meteorologists say. La Nina is a weather pattern that consists of an abnormal cooling of the Pacific Ocean that brings dry conditions to the southwestern United States and Mexico. La Nina has been linked to the Dust Bowl of the 1930s, the dry spells in the Southwest of the 1950s and the drought from 1998-2002. See 5 ways the drought may hit your wallet at the grocery store.
Although the USDA has predicted an increase in all grocery prices, with jumps of 2.5 to 3.5 percent, prices on beef and veal are predicted to go up 4 to 5 percent. Corn and soybeans, which have been heavily impacted by the drought, are a major feedstock for beef, pigs and chicken, and will drive meat prices higher. A U.S. News article says that some experts predict the prices on beef, poultry, pork, milk and eggs could rise as much as 10 percent.
As mentioned previously, water shortages have reduced the feedstuffs needed for animals. Scott Brown, research assistant professor in the University of Missouri College of Agriculture, Food and Natural Resources told cattlenetwork.com that corn yields may suffer a 10 percent or more decrease compared to last year. Corn futures have jumped to $8 per bushel in late July, up from $5.50 per bushel at the beginning of June.
The Agricultural Department's figures show that the price of dairy products will increase 3.5 to 4.5 percent and eggs by 3 to 4 percent, The New York Times reports. The forecast is based on the government's consumer price index for food. However, Gregg Engles of Dean Foods Co., said the impact from the drought on dairy prices may be less extreme than many analysts believe due to tepid demand, MarketWatch reports.
Nearly everything is getting more expensive as a result of corn, an investorplace.com article said, and soft drinks are no exception. Rising costs may have held Coca-Cola back in its second quarter, with Q2 earnings tallying $2.79 billion in profits, down from $2.8 billion a year earlier, the article suggests.
In May, MSN Money reported that U.S. prices for peanuts have soared 54 percent in the past 12 months as farmers in the southeast moved their peanut acreage to other crops as a method of dealing with the drought.