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Floodwaters are threatening thousands of acres of corn crops accross the Midwest in an increasingly competitive market.

The June flood of 2008 could have effects that range much further than the levees or the land they protect.

This problem doesn’t start in the flooded cities, homes, or roads that attract television cameras. It sits in the soggy fields that go largely unnoticed. And it could spread to every dinner table and gas tank in the country.

The flood damage could take hundreds of millions of bushels of corn off the market this fall. Markets took notice last week, as corn for September delivery shot past the $7 mark to settle at $7.46 per bushel Friday on the Chicago Board of Trade. Even those who do not trade commodities for a living can guess at the results. For shoppers, it means Mother Nature just added a few dollars to this fall’s grocery bill. For ethanol producers, it means razor-thin profit margins could disappear altogether.

“In the long run, the price of corn will either reduce our ethanol production or the price of ethanol will have to come up,” said Bill Becker, chief executive officer for Lifeline Foods of St. Joseph.

Lifeline can produce up to 50 million gallons of ethanol per year, but the plant has reduced its ethanol production as prices became less favorable, according to Mr. Becker.

An article in Forbes magazine last week speculated that many, if not all, of the small to midsize ethanol plants in the nation could close in upcoming months in response to high corn prices from the flood. Because Lifeline produces food products side-by-side with ethanol, it has more flexibility in its efforts to remain profitable.

“We grind about two million bushels of corn per month and a high degree of that goes to the food business,” Mr. Becker said. “When ethanol is in high demand we can increase the percentage that goes to ethanol, or we can favor food when ethanol is unfavorable.”

An increase in ethanol prices could raise gas costs in states like Missouri that have ethanol mandates. All states would feel some effect, as ethanol replaced the controversial chemical MTBE as an additive for all unleaded fuel in recent years.

The U.S. Department of Agriculture will give an update on crop damage today when it releases its weekly field and crop progress report.

Agribusiness reporter Clinton Thomas can be reached at clintonthomas@npgco.com.