KANSAS CITY, Mo. -- Everything -- from the cereal at the breakfast table to the grain cattle eat to even the plastic bags that bring home groceries -- is made from corn. When corn prices increase, the cost to bringing these products to consumers does as well.
"It's going to continue for quite some time because with a reduction of our supply and our crop," said Frank Stone, the president of Kansas City Trading Group. "It means that next year becomes more critical to grow crops and the price is going to have to stay high enough to attract enough acres around the world to grow corn, beans and wheat."
Corn and soybean prices on the futures market have surged to record highs amid the worst drought in half a century, with new crop contracts for corn rising 50-percent since early June and soybeans increasing about 35-percent.
Stone said while wheat had a great harvest, the prices for soybean and corn futures - what they'll cost next winter - are hitting all time highs. Though, he did say it will take about six months for shoppers to feel the impact in the check out lane.
"The only bright spot is that with new hybrid varieties of corn it can probably withstand the drought a little better," said Stone. "But we have a lot less supplies coming into the crop year and the demand for food in general has grown as the as the world has grown."
While the news is negative for now, Stone expects the market to correct itself once cooler temperatures and rain move in.
"We'll have historically high prices until we get our crop planted next year and look like we're going to have a decent year," he said. "I would say it's going to be with us for 12 to 18 months."
The drought and lower food production extend beyond Kansas City; low rain levels are also affecting Brazil and Argentina's soybean output, which could affect the world's food market.