- Last Updated: 2:58 PM, August 11, 2012
- Posted: 12:04 AM, August 11, 2012
Corn prices hit an all-time high yesterday in the aftermath of the worst summer drought to bake the farm belt in 56 years.
Experts predict higher prices in grocery aisles for a wide range of corn-based products — from beef to candy and snacks to cereals — as well as hikes at gas pumps where corn ethanol is used to spike gasoline.
“The US drought means that global corn supplies will be critically tight for the next year,” William Tierney, chief economist for AgResource Co., told Bloomberg.
The biggest price jumps will likely be as much as 6 percent for beef and pork, since many ranchers have sold off herds for lack of corn to fatten their animals, said Rick Whitacre, a professor of agricultural economics at Illinois State University.
The spike in corn futures prices weakened in later trading as investors took profits, lowering prices 1.8 percent to $8.0925 a bushel after reaching a record $8.49 a bushel.
Corn has zoomed 60 percent since mid-June when droughts started, said the US Department of Agriculture.
The run-up yesterday came after the USDA slashed its forecast for corn output to the lowest average corn yield seen in 15 years, analysts said.
Before the drought hit, the USDA estimated farmers would produce 146 bushels of corn per acre, but the heat wiped out many fields, reducing the yield to just 123.4 bushels per acre.
The Midwest grows about 75 percent of the nation’s crop, valued at $76.5 billion in 2011.
A shortfall of corn would be offset with imports from Canada, Argentina, Brazil and China, analysts said.
The spike in corn prices is hitting more than just shoppers’ wallets.
Recently, livestock producer Cargill blamed an 82 percent decline in fourth-quarter profits, in part, on a squeeze in beef profit margins.