7/12/2012

Midwest drought may spark food inflation

A punishing Midwest drought may lead to food inflation as the cost of corn soars and the price of a key feedstock for ranchers rises. Experts warn it could mean higher costs for everything from a hamburger to a gallon of milk in the months ahead.

"Farmers are going to have higher feed prices. We're definitely going to see food inflation coming into the equation," said Phil Flynn, a veteran commodities trader for the PFGBest brokerage in Chicago. "I think we're at the point of bigger problems. This was one of the most critical weeks, and we didn't get the rain that we needed."

Big users of grains, namely ranchers who depend on corn as a feedstock for their animals, are taking the first hit.