Drought continues, experts worry food prices will rise

Drought continues, experts worry food prices will rise As drought in the Midwest has hurt the supply of corn and soybeans, experts remind shoppers across the country...

Drought continues, experts worry food prices will rise As a drought in the U.S. Midwest has hurt the supply of corn and soybeans, experts are reminding shoppers across the country that if there is no rain for a long time, there may be rising pressure on food prices, including milk and meat. Drought and heat have damaged crops, and economists fear the situation will worsen. Milk prices, which are expected to be flat or declining this year, could rise if feed prices rise. As for the impact of the drought, we won't know until early August or September. The USDA provides estimated food prices each month, but the June data showed growth of less than 5% in key items, such as dairy and meat products, without taking into account recent increases in grain prices. As for the impact of drought on prices, updated figures will be released on July 25. Some economists expect corn supplies to be abundant this year as many growers in the Corn Belt, including Illinois, Indiana, Iowa, Nebraska and Minnesota, have increased corn planting acreage to meet growing global demand, but now yields will decline due to drought and high temperatures. The price of a bushel of corn reached $7.48 on the Chicago Board of Trade this week. The government's forecast for this year and next is $6.40 a bushel. Last month's forecast was for $4.20 to $5 per bushel. For consumers, the expected rise in food prices is little news. Corinna Alexander, an agricultural economist at Purdue University, explained: "Food price inflation in 2011 was much higher than normal. Last year supermarket food inflation was 4.8%, and this year it is expected to be around 2%. The drought means food prices will be lower in 2012 and 2013." "Processed foods, such as cereals, are not expected to see significant increases because producers have already raised prices significantly last year," she added, but costs for things like cooking oils and salad dressings are likely to increase because soybean crops are also affected.