Timesonline
Using corn for ethanol production led to a spike in prices long before the floods took their toll. According to some reports, the meat industry is already selling off breeding animals in order to offset losses from the high price of corn and soybeans it needs to feed its livestock.
The move will temporarily increase the meat supply, but it also means that supplies of some meats will begin to shrink later this year and prices will rise. Tyson Foods, the giant Arkansas-based meat producer, has predicted that retail chicken prices will have to jump by double-digit percentages in 2009 for poultry processors to recoup their feeding costs. The cost of food is increasing at its fastest pace in 18 years.
The price of corn has more than tripled in the past two years to record high levels. Analysts estimate that flooded Iowa and Illinois and the other corn states might produce 15% less grain than last year. Some believe the shortfall will be even larger. The commodity traders in Chicago certainly think so and are bidding up the price of corn in the expectation of shortages. More
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