CHICAGO The worst flooding in the U.S. Midwest in 15 years sent fresh shocks to global markets and consumers as corn prices hit record highs on devastating crop losses in the heart of the world's top grain exporter.
The price of corn at the Chicago Board of Trade soared above $8 a bushel for the first time as relentless rains and overflowing rivers raised fears that Midwest farmers will not be able to grow much of anything on as many as 5 million acres
"The market is being driven by water," said Glenn Hollander, a veteran grain merchant on the CBOT trading floor.
"Estimates show 3 million acres of corn under water and probably 2 million didn't get planted. So that gets you up to 5 million or over 700 million bushels, and that takes out the entire carry-out," he said, referring to estimates for grain stocks carried over to the next crop year.
Overwhelmed river levees across Iowa and Illinois, which produce about a third of U.S. corn and soybeans, have also displaced thousands of people. Twenty-six people have died since May 25 during storms or tornadoes in flood-stricken Midwest states.
The White House said U.S. President George W. Bush would pay a one-day visit on Thursday.
Dry weather was forecast through Wednesday across the region, allowing some rivers to recede. But those flows were surging into the Mississippi River, which was expected to rise above 1993 records and test barriers guarding low-lying sections of Burlington, Iowa, and Quincy, Illinois.
Hundreds of National Guard troops and volunteers reinforced levees on Monday on both sides of the Mississippi.
Some of the worst agricultural flooding was in Iowa, where the U.S. Department of Agriculture said 9 percent of the state's corn crop and 8 percent of the soybeans were flooded -- some 2 million acres.
"It's not a good start, at all," Iowa farmer Donald Miller said from his partly flooded farm near Iowa City. "This corn should be knee-high right now and it's ankle high, the good stuff is. The puny stuff, it's stunted, and probably will never amount to anything."
Saturated, mushy soils suffocated the seedlings, he said.
Many farmers waited for flooded fields to dry out enough for them to decide whether to replant soaked acres. But yields will be down due to late planting.
The problems add up to more food inflation for not just U.S. domestic consumers but also dozens of countries that buy U.S. grain. The United States exports 54 percent of the world's corn, 36 percent of soybeans and 23 percent of wheat.
Foreign buyers are scrambling.
"They have sticker shock right now. There are credible people in the trade who think corn will be $2 higher in a month. It could happen. That would put beans up to $20. It could happen. Anything can happen," said Rich Feltes, senior vice president and director of MF Global Research.
On Monday morning, the price of corn for delivery in July before next year's harvest jumped to a record $8.07 a bushel before retreating to close at $7.87, the eighth consecutive day of record prices. Soybeans for July delivery neared the record of $15.96 before closing at $15.34.
Group of Eight finance ministers, meeting in Japan over the weekend, highlighted the threat to the global economy.
"Elevated commodity prices, especially of oil and food, pose a serious threat to stable growth worldwide, have serious implications for the most vulnerable and may increase global inflationary pressure," the ministers said in a communique that did not offer any specific remedies.
The damage to Iowa's bridges, highways, roads and railroad tracks is worse than what the state suffered in 1993.
"They've lost a lot of bridges and they've lost a lot of track and it's affected freight service throughout the state," said Dena Gray-Fisher of Iowa's Department of Transportation.
Amtrak suspended passenger train service between Chicago and St. Paul, Minnesota, and from Chicago to Denver.
Iowa officials said 36,000 people have been evacuated or forced from their homes in Iowa, and the state's losses may exceed the $2.1 billion suffered during the epic 1993 flood that triggered huge federal outlays. In total, the 1993 flood caused 48 deaths and $21 billion in damage.
As in 1993, rebuilding and repairing homes, roads, rail lines, bridges, electrical grids and sewers could boost the region's economy, officials said.
"It will certainly take a long time" to rebuild, Iowa Gov. Chet Culver said.
(Additional reporting by James Kelleher, Mark Weinraub, Christine Stebbins and Sam Nelson in Chicago and Glenn Somerville in Washington; Editing by Peter Bohan and Xavier Briand)