Flooded farms in Iowa may have far-reaching effects on corn prices and ethanol. (Photo by Eric Kroh)
By Eric Kroh
As farmers in Iowa clear sediment deposited on their land by the Mississippi, Iowa and Cedar rivers, it remains to be seen just how much damage the floods have done.
At a community meeting in Wapello yesterday, close to where the Iowa River empties into the Mississippi, farmers were reporting 100 percent damage to their corn crop. It’s too late in the season to replant corn, and it wouldn’t be eligible for insurance anyway, so some are trying to get soybeans in the ground while they still can and others are throwing in the towel.
A report released by the United States Department of Agriculture Monday predicted the amount of corn harvested in the fall would only be 2 percent less than what was forecast before the floods. But even such a small loss can have large consequences at a time when there is much less corn to shuffle around in the ledger than there has been in the past.
Corn stocks — the amount of corn at any given time not being used for anything — are at the lowest levels they have been in decades and analysts fear they could drop even lower. Low corn stock levels means high corn prices, said USDA economist Alan Baker, in an interview. Bad news for gas and food prices.
It’s also bad news for the ethanol industry, which already was reeling from high corn prices. Ethanol giant Verasun recently said it would delay the opening of three new ethanol plants due to high corn prices. Some have taken the opportunity to rally around Texas Gov. Rick Perry’s request to the Environmental Protection Agency to repeal the ethanol mandate, which he says is artificially inflating food and gas prices.
On Monday, more than 50 GOP House members, led by Bob Goodlatte of Virginia, voiced their own support of a repeal of the ethanol mandate. It remains to be seen whether Sens. John McCain and Barack Obama will throw their hats into this ring.
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