Cities in Iowa, Wisconsin, Illinois and Missouri sandbagged levees to keep them from bursting and urged residents to seek higher ground. River levels in some places have surpassed records set during a flood in 1993, considered the worst in recent history.
The entire state of Iowa is experiencing flood conditions, according to the Army Corps of Engineers. In Cedar Rapids, population 124,000, a railroad bridge collapsed, 3,000 homes were evacuated and a downtown hospital had to be evacuated. Experts say Iowa's Cedar River could crest above 30 feet -- more than 10 feet higher than its crest of 19.27 feet in 1993. Heavy rains are expected to continue across the Midwest at least through Monday, though drier, sunnier weather is forecast next week.
The flooding threatens to wipe out farms' crops of corn or soybeans, and this has pushed prices to record levels. On the Chicago Board of Trade Friday, corn prices hit a new record high of $7.3175 a bushel, while soybeans traded near record highs, closing at $15.60. Corn prices have climbed about 10% in the past week, threatening to put further upward pressure on food prices that have been climbing for a year.
Bill Lapp, an economist at consulting firm Advanced Economic Solutions, Omaha, Neb., and former chief economist at ConAgra Foods Inc., said higher grain prices brought on by poor weather will help push food prices up by 9% a year through 2012, including this year. Last year, food prices rose by 4%, and the Department of Agriculture estimates they will rise by as much as 5.5% this year.The Iowa Renewable Fuels Association said Friday the flood has caused 300 million gallons of ethanol production, on an annual basis, to be forced off line and that could quickly grow to 400 million gallons. The higher corn prices are also hurting big grain processors like Archer Daniels, which turns the grain into products from corn syrup to ethanol. Expectations for tighter ethanol supplies because of higher corn prices could increase demand for gasoline, in turn helping to force up gas prices. The squeeze on ethanol also could heighten calls for the federal government to suspend its requirement that nine billion gallons of biofuels be blended into gasoline by the end of this year.
WSJ: Saudi Arabia's oil minister today will address reports that the world's largest oil-producing country is set to raise production by about 500,000 barrels a day, his adviser said.
The increase would bring Saudi Arabia's oil production to 10 million barrels a day, the country's highest ever, according to reports by the New York Times and the Middle East Economic Survey, an industry publication.
Saudi Arabia has called for a meeting of oil producing and consuming countries on June 22 in the port city of Jiddah to discuss ways of dealing with soaring energy prices.
The New York Times report on Saturday, citing unnamed analysts and oil traders briefed by Saudi officials, said the production increase was to be announced following the meeting. The Middle East Economic Survey said Friday that Saudi Arabia was considering a production increase, but didn't provide a source.
The Saudis are concerned that sustained high oil prices will eventually slacken the world's appetite for oil, affecting them in the long run. Crude prices have reached record highs, surpassing $139 a barrel on June 6 after surging nearly $11 in the biggest single-day price leap ever. The prices had receded by Friday, with the benchmark light, sweet crude for July delivery falling $1.88 to settle at $134.86 on the New York Mercantile Exchange. In London, July Brent crude lost $1.84 to settle at $134.25 on the ICE Futures exchange.p/s photo: Sonja Kwok Sin Nei & Sharon Chan Mun Chi