NEW YORK — Flooding in the Midwest can be expected to cause near-term price volatility in corn and soybeans, but it will be several weeks before the true impact of the heavy rainfall on crop production can be predicted, one analyst said yesterday in a conference call. According to reports, about 5 million acres of cropland have been flooded in Iowa and neighboring states and will not be able to produce crops. “Nobody can tell you what the full effect of the flooding will be,” said David Driscoll, a food manufacturing analyst with Citigroup. “We will see substantial volatility, with big changes in every little weather event until the end of July,” he said, noting that corn pollination occurs in July. So far this month, he said, corn prices are up 22%, wheat prices 16% and soy prices 15%. Addressing the issue of inflation in general, CPG companies can be expected to continue to pass commodity cost increases on to retailers, he said. Deborah Weinswig, another Citigroup analyst speaking on the call, cautioned that although supermarkets have been able to pass those cost increases along in the form of higher shelf prices, it could become more difficult to do so if inflation rises too quickly or if it surpasses 5%.

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