NEW ORLEANS -- Manufacturers and analysts expect Hurricane Katrina to have no near-term impact on retail food prices, even as the disaster has pushed up already-high energy prices.
At the same time, industry watchers cautioned that it's too soon to determine Katrina's full impact, given rising energy prices, incomplete information on crop damage, and uncertainty about transportation availability.
"Companies in the short term don't expect to see a change in prices," said Stephanie Childs, a spokeswoman for the Grocery Manufacturers Association. "They've had their long-term contracts in place for a while. Long-term, it's too early to speculate."
Brian Todd, president of the Food Institute, said some retail food prices could increase, though, depending on such factors as the price of energy used to process, package and transport processed foods and how great a hit manufacturers and retailers absorb on any given product.
"Even before Katrina hit, we were talking about how higher fuel prices were going to impact food prices, particularly packaged foods. It's kind of a domino effect."
He expected the institute to revise its food prices outlook, which it bases on raw USDA data, later this month. The trade organization had predicted food prices would rise between 2.5% and 3.5% this year.
Some observers predicted lower prices for grains, which depended heavily on Louisiana's port for shipment abroad. They speculated that a backlog of grain stuck in the port would be diverted for domestic use and push prices down.
"If exports aren't moving as quickly, there could be an abundance of grain," Todd said.
Merrill Lynch said in an Aug. 30 report that companies like ADM have shown "some remarkable dexterity" in moving grain around.
For Cargill, however, whose grain shipments slated for export were at a standstill, the shipments were already earmarked for export, and good transportation options were lacking, said David Feider, a spokesman for the huge food processor. "There aren't very many feasible alternatives right now," he said.
Coffee also heavily depends on New Orleans as a port of entry and warehouser and roaster. Nearly 30% of imports into the United States enter through New Orleans, said Ted Lingle, executive director of the Specialty Coffee Association of America.
Especially hard hit was Procter & Gamble's Folgers coffee, which did the majority of its roasting in New Orleans. P&G was still assessing the damage last week.
Observers disagreed on the outlook for coffee prices.
International marketing consultant Suzanne Brown predicted retail prices would increase within a month because coffee would have to be redirected to other ports.
Lingle foresaw a muted impact, though, noting that stocks in New Orleans were fairly minimal. When the hurricane hit, about 1.6 million bags of coffee sat in New Orleans, about a fifth of the imports that pass through that city, Lingle said. "But it's not that difficult to divert to Jacksonville or Houston."
The storm also shut down two major sugar refineries, but Jack Roney, chief economist for the American Sugar Alliance, foresaw little change in sugar prices, even after three bad years in a row for growers.
Food prices aside, higher gas prices alone could tamp down consumer spending.
Citigroup said in a beverage report that high gas prices could lead beer consumers to trade down to cheaper brands. Prices at the pump were starting to ease last week.
