As the worst drought in decades grips 26 U.S. states, business owners in affected areas and beyond are growing concerned about what it could mean for their bottom lines. Farming areas in the grain belt have been hit with scorching temperatures and extreme dryness, which have damaged crop production and sent corn prices surging about 45 percent in the past two months. Soybean and wheat prices have also seen large jumps.
Such an increase is likely to impact the costs of everyday food items, from breads to meat products that come from grain-fed animals. “Corn prices, in particular, are likely to feed through into a whole host of processed food prices, including various animal proteins, as well as anything using corn syrup sweeteners,” economists at Bank of America Merrill Lynch wrote.
The drought is not expected to trigger an increase in consumer food prices for another two to three months, according to Richard Volpe, a research economist at the USDA.