Drought Impact Expected to Hit Grocery Shoppers in January

Meat in a refrigerator at Bud's Custom Meats in Riverside on Thursday, July 19, 2012. (Matt Nelson/The Gazette - KCRG-TV9)

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By Ellen Kurt

CEDAR RAPIDS, Iowa - Look for higher prices at the grocery store as soon as January as the impact of this year's record drought that slashed corn and soybean yields is felt by consumers.

Prices for corn and soybeans are higher than a year ago, with corn prices 23 percent higher and soybean prices 20 percent higher. The increase in corn prices will affect farmers’ feed prices for their livestock and that will trickle down to consumers in the form of higher meat prices at the supermarket.

"These higher grain prices continue to put pressure on grain users, from ethanol plants to livestock farmers," said Dave Miller, director of research and commodity services for the Iowa Farm Bureau Federation in West Des Moines. "Whether you’re feeding your family or your livestock next year, you’ll feel a pinch in your pocketbook.

"In the past few weeks, ethanol production is running 12 percent below last year’s levels. Cattle, hog and poultry farmers are trimming back production expectations for the coming year."

As farmers bring livestock to market sooner and at lighter weights, meat supplies are fairly strong. Miller warns that this will change at the beginning of the year.

"Lower production levels are expected to support beef and pork prices in 2013," Miller said. "Consumers can expect higher meat prices in the coming year as livestock farmers continue to make adjustments due to the continued strength and increases in feed costs."

While Iowa farmers sustained lower corn yields due to the drought, the state still leads the nation in corn production, according to Miller.

"The statewide corn yield is estimated to be 140 bushels per acre, down 32 bushels per acre in 2011," he said.

Iowa farmers raised 1.9 billion bushels of corn this year, accounting for nearly 18 percent of U.S. corn production."

Iowa soybean fields weathered the drought better than expected. Iowa farmers are expected to harvest an estimated 399 million bushels of soybeans, representing 14 percent of the nation's soybean production.

Soybean yields also were down from last year, estimated at 35.3 bushels per acre.

The U.S. Department of Agriculture will release its monthly crop production report on Friday.

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