Midwest levee breaks, corn price at new high

By Carey Gillam

KANSAS CITY, Missouri (Reuters) - The Mississippi River burst through an earthen levee on Friday, inundating a small Missouri town as more heavy rains fell and adding to the U.S. Midwest's multibillion-dollar flood disaster that is fueling fears of global food price inflation.

The levee break, the 36th in the last two weeks, sent a torrent of muddy water into Winfield, a town of about 800 north of St. Louis, where officials said about 100 homes and 1,300 acres of crop land would be submerged.

Heavy rains again were reported in parts of the region on Friday and forecasters warned more flooding was likely because the sodden ground can absorb little more.

"It's a tragic, devastating disaster," Russ Kremer, a grain and livestock farmer who is president of the Missouri Farmers Union, said of the worst Midwest floods in 15 years.

He said towns like Winfield and hundreds of thousands of other acres now submerged in the region where rains and levee breaks represent "a complete loss for a lot of people. It will have a significant effect on the market."

Heavy rains this month have caused more than $6 billion in crop damage in Iowa, Illinois, Indiana, Missouri and Nebraska, a key growing region in the world's biggest grain and feed exporter, according to the American Farm Bureau Federation.

Corn prices hit a record at the Chicago Board of Trade in overnight screen trading on Friday at $8.25 per bushel in the July 2009 contract, more than double the 40-year average.

Fears that as much as 5 million acres of corn and soybeans have been lost to flooding have pushed corn and livestock prices to the record highs.

Corn is the main feed for livestock, is used for ethanol fuel and in hundreds of other food and industrial products throughout the economy.

Before the floods, stockpiles of corn in the United States -- which ships 54 percent of all world corn exports -- had already been projected to fall to 13-year lows next year. So the effect on global food prices as U.S. prices rise has alarmed everyone from central bankers to food aid groups.

FARMERS LOSING HOPE

Iowa officials said this week at least 2.5 million acres

of corn and soybeans, well above 10 percent of planted acreage in the top U.S. producing state for those crops, needs to be replanted. But it is too late in the season for good yields on replanted fields.

Jason Roose, an Iowa corn and soybean farmer who is an analyst for U.S. Commodities in Des Moines, said he had planned to replant his acreage this week "but it didn't happen. I'm not able to do anything, and everyone else around here is in the same boat."

The Des Moines Register reported that the first half of 2008 was the wettest in Iowa since record-keeping began in the 19th Century, with nearly two feet of rain.