
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, September 7, 1995                   TAG: 9509070053
SECTION: BUSINESS                    PAGE: B8   EDITION: METRO 
SOURCE: ASSOCIATED PRESS
DATELINE: DES MOINES, IOWA                                 LENGTH: Medium

WILL FOOD PRICES GO UP?

FOR NOW, CONSUMERS SEEM IMMUNE to rising food prices, since processors, who last year benefited from low commodity prices, have absorbed this year's higher costs, analysts say.

The wet spring and sizzling summer across most of the Midwest have sent grain prices up about 25 percent from a year ago, and the impact eventually could find its way to the nation's dinner tables.

Rising corn prices have made it more expensive to fatten livestock, and increased wheat prices have boosted the costs of bread, cereal and a number of other staples that are the base of many American's diets.

But for now, consumers seem safe from higher food prices and might not see any significant cost changes, at least through the remainder of this year.

``I don't think [the consumer] will be affected very much,'' said Mike Singer, an agricultural economist at the Federal Reserve Bank of Chicago, adding that food prices remain low by historical standards. ``The cost of the corn in corn flakes is relatively minor.''

The unusually cool and wet spring in the Midwest stunted the wheat crop in Kansas and delayed corn planting in Iowa and Illinois. The same region was blasted with a summer heat wave that did not let up for weeks, causing crops to wither and more than 4,000 Iowa cattle and thousands of chickens to die.

Rising export demand for U.S. crops also has pinched supplies and contributed to the price increases.

In addition, this year's corn crop was limited by federal farm programs, which required farmers to reduce planting after the record 1994 crop.

The combination of these factors sent grain prices soaring about 25 percent from a year ago.

Wheat for September delivery closed at $4.551/2 a bushel Wednesday on the Chicago Board of Trade, up more than 85 cents a bushel from a year earlier. September corn closed at $2.891/2 a bushel, up 63 cents from a year ago.

Analysts say food processors, who last year benefited from low commodity prices, have absorbed this year's higher costs instead of passing them on to the consumers.

Also, there is a delay between when prices go up and when consumers see the higher costs in the supermarket.

Bob Wisner, an economist at Iowa State University in Ames, said consumers actually may see lower beef prices in the coming months, as farmers cull their herds, sending more animals to market in response to the rising feed costs.

by CNB