One of the biggest threats facing the president in his bid for reelection is the drought. Not because it’s miserable outside, though if it’s 100 degrees on Election Day, that will certainly tamp down turnout. The real threat lies in the perception of the economy.
It’s almost certain that food prices are going to go up as a consequence of the drought — probably in a month or two, just as campaign season gets into high gear. As food prices go up, so does concern about inflation and also concern about the economy. If you’re already trying to make ends meet, a steep rise in the price of staple foods is the last thing you need.
Here’s what has happened to predicted prices for various food products over the last few months. These graphs track futures — that is, what the expected price will be at a future date. In these graphs (all of which are from TradingCharts.com), that date is December 2012.
Corn
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Soybeans
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Soybean oil
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Wheat
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Canola oil
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These products are all staples, used to make a huge variety of other products — and their futures prices all started getting much, much higher around the middle of June. Which is right when the drought kicked into high gear. The chart below shows the growth of the drought across the continental U.S., by severity, starting in the middle of June. The redder the color, the more severe the type of drought.
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This chart is more illustrative. It shows the rate of change starting in the middle of June.
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If you’re more of a video type, here is a video from the NOAA depicting how vegetative health has worsened over the year. The more orange, the worse crops are doing.
Point being: Don’t be surprised if you start hearing reports that the president’s campaign team is buying a lot of silver iodide and taking flying lessons. That’s just how campaigns work.
