Heat impacts corn crop, drives up food prices

July 10, 2012 (CHICAGO)

Just like gas prices earlier this year, food prices are on the rise.

Among the hardest hit is this year's corn crop, and that grain is in many food products such as meat, dairy and cereal. How high prices could go could depend on how much rain we get or don't get in the next few days.

For Bob Bleuer of Channahon, this is no field of dreams. If the corn could talk, what would it say? "Water me," Bleuer says.

In his 40 years as a farmer, this is shaping up to be one of Bleuer's worst. His 550-acres of corn have received less than half the usual amount of rain, leaving many stalks without ears and up to two feet shorter than normal.

"It collapses like this to be a smaller target for the sun to beat on," Bleuer said, indicating leaves that were rolled. "This should be flat … it should be all opened up."

The dry conditions could not have come at a worse time, with corn now in the midst of pollinating, a stage when moisture is critical.

Without substantial rain in the next week, Bleuer says more than half his crop could be lost.

"It won't matter if it rains three, four, five inches after the pollinating time because it's not going to pick up and do it right later. It's either done it right now or it doesn't do it at all," he said.

It's not just Illinois corn that's withering in the field. Only 48 percent of the nation's corn crop is in good condition or better, and that's causing corn prices to soar 37 percent since mid-June. And because corn is used to feed livestock and make packaged products the price increases could extend well beyond the produce section.

"Of all the major field crops that are grown in the United States, corn is the single most important for the food supply chain," said Ricky Volpe, U.S. Department of Agriculture.

"Everything's going to get a little more expensive if it's very true that we have this shortage," said Scott Shellady, senior vice president, Trean Group. "The problem is that we have to pull this crop out of the ground to verify. Right now it's still all finger in the wind kinda guessing."

But Bob Bleuer says the proof is in his hands.

"The worst we had was, everybody talks about '88, which you always remember the worst ones, and this is banging up close to it," he said.

The dry conditions are also impacting soybean and wheat futures. On Wednesday, the government releases its monthly corn yield report, which could give us a better sense of how families' pocketbooks will be impacted moving forward.

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