Tuesday, June 17, 2008

How the floods will hurt the economy

"Beyond the human tragedy, the flooding in Iowa and other parts of the Midwest may also lead to higher food prices and lower exports."

By Chris Isidore, CNNMoney.com senior writer

NEW YORK (CNNMoney.com) -- The flooding in Iowa over the last week has been a tremendous human tragedy for many in the Hawkeye state.
But it appears that the heavy rains will also have an impact that reaches far beyond the Midwest. Nationwide, consumers are likely to see higher grocery prices into next year due to disruptions in corn production. That could be another blow to an economy that's already reeling in part because of inflation fears.
Corn futures hit a record intra-day high on Monday as traders tried to estimate the damage to the corn harvest.
Iowa alone is estimated to have lost between 1 million and 3 million acres of corn production. That's about 7% to 21% of the overall production by the nation's top corn producing state.