Jerry Edle, left, and Dave Lanz keep an eye on a large propane tank which they are towing through a flooded cornfield, in Oakville, Iowa, Monday, June 16, 2008. The tank floated away during flooding. (from yahoo.com - AP Photo/Sue Ogrocki)
As if the American economy and the American consumer weren’t being pinched enough by $4.00 to $5.00 a gallon gasoline prices, here comes another big hit.
The flooding in the Midwest will have a major impact on corn prices (see this article), corn supply, and a ripple effect that will be felt in almost all food categories, from breakfast cereals to meat and poultry, to soft drinks and every other food item that contains corn or corn-derived ingredients. Examples of important corn-derived products are corn oil and high fructose corn syrup. They’re used to produce everything from margarine and soda pop, to french fries to bakery items. And rising prices and shortages of corn-derived ethanol will simply fuel higher gasoline prices. Ethanol production was already putting a strain on corn supplies and driving up the price of corn even before the flooding in America’s corn belt impacted this year’s crop.
A police officer demonstrates his finely honed public relations skills, and welcomes home a resident of flood ravaged Cedar Rapids, Iowa (read story) (AP photo/USAToday by Seth Wenig - Caption by RoutingByRumor)
Just like the rising price of crude oil, rising prices for corn will have an almost immediate impact on the cost of many of the things you buy. In fact, corn probably plays a more important role in the food chain than wheat, rice, oats, or any other grain.
If you thought the size of the box of your favorite breakfast cereal was shrinking, you ain’t seen nothing yet. If corn prices go through the roof, you’ll need a microscope to find your cereal boxes. Maybe we’ll switch to shredded wheat.
We expect that in addition to seeing rationing or purchase limits on rice at the supermarket, you’ll soon see shortages and rationing of corn and products containing corn as a major ingredient.
– Routing By Rumor