How The Drought May Cause Food Prices To Spike

Midwest Drought May Cause Food Prices To Spike

According to the National Oceanic and Atmospheric Administration the current drought is the worst since 1956. This is causing the price of corn to spike.

As a result, headlines like this are becoming more and more common (which cause fear and therefore cause corn prices to rise)

Rising Corn Prices and Your Grocery Bill – Smartmoney

Midwest drought shows little sign of abating – Reuters

Your burger is about to get pricier – CNN

Why should we care?

Today corn is in most of what we eat (high-fructose corn syrup), it is used to feed cattle, and is used in our gasoline (ethanol):

 

A continued spike in corn prices will have a negative impact on the already weak US economy. As consumers spend more on food and fuel, less is spent on consumer products. This may also impact China – as a large percent of consumer products are manufactured overseas.

So keep and eye on the weather and the hype…

 

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