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Blame the Weather for Rising Corn Prices

Althea Chang
Big Data Download

Even as the avian flu hits poultry in Asia, sending demand for U.S. corn feed lower, extreme weather conditions could lead to higher corn prices at least in the short term, according to The Weather Channel.

Farmers are still feeling the financial impact of last summer’s drought. Now the problem is too much precipitation.

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"The snow that we're seeing in Minnesota and North Dakota and now the flooding in the Midwest is delaying the crops from getting into the ground which could impact the yields downstream," said Paul Walsh, vice president of weather analytics at The Weather Channel.

Those planting delays could send corn prices higher in the near term, but meteorologists expect a normal summer which could be good news for farmers but not-so-good news for agricultural commodities traders as corn prices fall later this year.

National Weather Service forecasts for flooding this month led to spikes in Yahoo web searches for crop insurance, up 42 percent in March compared with February. And searches for the Great Flood of 1913, which occurred in the Midwest, spiked 2,600 percent last month as the 100-year anniversary of the natural disaster passed.

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Changes in corn prices impact dairy and meat prices and ultimately food companies like Post (POST) and the Frito-Lay arm of Pepsico (PEP). Restaurants like McDonald's (MCD), Darden Restaurants (DRI) and Yum! Brands (YUM), which reports earnings Tuesday, also feel the impact of corn price swings.

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