>> cisco. earnings tonight. >> jb? >> going back to the office to buy more chevron. broke above 110. 3% plus dividend. >> i like mosaic. going with the ag trade. >> jdsu. >> "power lunch" starts now. "halftime" is over. "power lunch" and the second day of the trading day starts right now. welcome, everybody, to special edition of "power lunch." key new numbers on state of housing in the united states. did we just turn a corner? also today, a real bellwether on the american consumer. how americans feel about the economy right now. an you think facebook has had a rough ride so far? well, the next mouse is about to drop. that's all coming up this hour. but first, let's go to sue herrera live in chicago. >> hi, ty. good to see you. i'm down here at the cme group in chicago and take a look behind me. this is where they trade

livestock, lean hogs and live cattle. that's right behind us and the reason that we're here is because the market started telling the story of the drought well before the news media did. and that's why we're focusing on the drought and its implications here in chicago today. as a matter of fact, this is the huge story as we all know. take a look at this map. it was just released from the usda and it really shows how severe the drought of 2012 has become. coming up, we'll take you through the heartland to show you exactly how hard hit different industries and agricultural sectors hit by the drought. there are problems on the mississippi, as well. barge traffic is really having trouble because the river is so low. they have actually had to lighten up their loads in order to make it up and down the mississippi river. so all of that is still ahead. we'll bring it back home for you, as well, to the dinner table, to the economy, to your

wallet. all of that is straight ahead on this special edition of "power lunch." but first we'll start with a key report on the state of housing. encouraging news from the home builders, especially here in the midwest. diana olick joins us now. >> reporter: that's right, sue. the midwest was the clear winner in home buier confidence in august. the home builder sentiment up 2 points and midwest up 9 points with builders more optimistic than farmers. the to the story was the opposite in the northeast and out west. now, breaking it down, the index components current sales conditions and buyer traffic each rose 3 points. sales expectations over 3 months rose a point an all at the highest level in five years so what's fueling the optimism given new home sales down over 8%? housing starts rising steadily as the supply drops. inventories down because banks

have been very slow to work through millions of delinquent loans and get foreclosed properties out on the market. tyler? >> all right. die why that, thank you very much. jeff kilburg is here to talk about how to play the home builder stocks. they have come a way in a hurry. >> that's right. first time in five years for that result. home depot yesterday. they used the word stabilization. seen a great run year to date above 4%. but i like a laggard. armstrong. they make the cabinets aen floors. despite the fact that 10-year yields are rising up right now, you have the mortgage so they'll repair the armstrong play. >> armstrong world. thanks very much, jeff. big numbers from some of the retailers, also, coming in, this afternoon and this morning, i should say. and to bring us up to date on that, courtney reagan in the house. >> reporter: target with second

quarter earnings beat on both the top an the bottom line gaining in traffic and advantage ticket. plus upping guidance. responding to questions on the earnings conference call it isn't attributing stronger sales of jcpenney but rather the own initiatives like grocery an 5% back to customers using its credit and debit cards. management notes strong website traffic that target is working on conversions specifically aiming to improve user experience so that consumers find what they want faster. separately, target is one of the retailers working to develop mobile technology. that's just announced today. sue, back the you. >> thank you very much, courtney. housing and retail two key drivers of the economy, both showing renewed strength so joining us to talk about the markets, the economy and how to invest against that is executive vice president jack adlin, president and cio of harris private bank. good to see you again. >> thanks. welcome to chicago.

>> yeah. thyou. i appreciateit. les start first of all with whether or not y agree with the reports that we have seen that are swi incremental strength in the economy. >> i think aft that jobs report that came out t beginning of the month seems like we are seeing a little bit of a rebound, add to that, you know, as you said, little bit stronger retailer, stronger housing and maybe momentum here. >> where does that leave us in terms of the market itself? how do you invest if the environment is sustainable? that's the big question, right? jobs. retail, whether it's just back to school season or whether the consumer's really back. how would you invest against that? >> right now, all about the fed and jackson hole and the odd thing is it's a paradox that we're seeing the strength and the drought and the higher prices. in my opinion, it's going to take the fed all of the equation for qe. >> really? >> that's what we're seeing now is higher interest rates and

uncertain stock market. >> we have had a big backup in interest rates. >> right. we had a low of 1.5 in the 10-year. up to 1.7 in a couple of a couple of weeks. unless the fed comes to the bond market's rescue, i see that going to 2%. >> do you think they should? >> i don't think they should. i think the federal reserve and monetary policymakers all over the world are doing the job that fiscal policymakers ought to be doing and an election year. no one wants to give anybody bad news but i think that early 2013 i think policymakers in washington really need to get their act together and make difficult choices. >> are there certain sectors to benefit? >> yeah. i think that obviously, you know, consumer discretionary is fantastic. unfortunately, victim of their own success. trading at a huge premium relative to the market but i think certain industrials, certain cyclicals to benefit in

the near term. >> great to see you. thank you for coming down. >> good to see you, sue. >> you, too. bob pisani, what are you hearing from the traders that you are talking to and whether or not jack's sense is on target there? >> right now, the big topic today is what affect the drought has on the stock market and on the overall economy. deere was the big topic, sue. they disappointeded. missed a lot and sales in europe down and debate on the affect of the drought. see the stocks down today and bulls insisting once you get past this corn will go up. prices are higher. crop insurance to protect a lot of farmers. in fact, they will have money in 2013 for machinery and fertil e fertilizer. they have recovered under this bull scenario of some people don't agree that fertilizer price demand goes up in 2013. housing story, sue, you mentioned and diana there, sentiment index up, that's

encouraging but not much moving in the home builders because they're near 52-week highs already in anticipation of a partial housing recovery. sue? >> okay. bob, thank you very much. having a few little technical difficulties with the ear piece. i know who can solve that for me, rick santelli. so nice to see you, ricky. >> we need ben bernanke. probably fix the earpieces. >> could you fix the feedback. rick, tell me what's happening in the market today. we have economic data that's interesting. whip sawed the market a little bit. what are we doing on yields? >> consider this, 16 trading days ago, 1-6, hand signals in chicago, a low yield, historic close of 10s. 16 days later, an intraday high yield of 181. we haven't closed at a yield like since, say, may 11th.

>> where do you think we're going next? >> i think there's a good chance considering we still have a good chunk of august left and a lot of microphones are, you know, different parts in the world on vacation and europe, 190s, close to 2% and more interested in the 30-year bond. i think it's much closer to 3% and a big psychological area. >> what about september? looking out further, there's key meetings that concern europe coming up in september and i keep hearing from everybody that september is the month to whipsaw the bond market. >> that's a september to be disappointed in europe. >> you got it here first! >> you will see great opportunities, you know, if you're bold to pick some spots out to buy the selloffs in treasuries but you have to time it right. in two weeks, see how far in 16 trading days. by the time of really first, second week of september when we get back to a real reality.

>> okay. >> real quickly, though, corn. everybody talks about corn. that big report we had on friday, you know, it made its all-time high intraday on friday. >> right. >> and then basically hovering under $8 a bushel. demand is destruction. prices so high and talking about beef, feeding, demand destruction to concentrate on. >> we will in a few minutes. >> thanks, sue. >> thank you, ricky. >> great to have her in chicago. >> great to be in chicago. when we come back on this special edition of "power lunch," more on the drought in the midwest and the situation there and tyler, i'm going to hand it back the you. >> all right, see. >> see you in a few. >> fantastic. back with you in a little bit as you move on to the grain room and now a quick market flash. >> good thing i wasn't picking my nose there. thank you very much. a lot of fear within certain investors that president obama might make tighter gun laws, maybe especially in the backdrop of aurora, colorado.

key bank downgrading smith & wesson and sturm ruger saying that pooled up demand, people buying more guns i guess in the thinking that there will be stricter controls in the future. they say it's unsustainable and ruger downgraded to underperform and why it's 4.3%. smith & wesson 9% to the downside. >> thank you. you thought facebook stock was a stinker since the ipo? hard to quarrel. may be reason to believe it's all about to fall some more we'll explain next. much more on today's drought coverage. we have a special half hour coming up. also full coverage on cnbc.com and all of the networks of nbc. today's poll question asks, have you changed your budget based on food prices? go vote at finance.yahoo.com. we'll be right back. after this.

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facebook stock woes continue falling 46% since going public in may but it has a high profile

friend. george soros's fund management bought news of facebook shares in the second quarter according to those 13f filings. will the social network lose friends and shareholders when its first lock-up period expires? julia boorstin joins us with the details. >> reporter: it's a moment of truth as facebook investors evaluate whether to sell 271 million shares tomorrow. but with the stock down over 45% since the ipo some say it may not have further to fall. potential sellers when the hearing expires tomorrow is early investor peter thiel and accel partners and tiger global. microsoft will also be able to sell and probably unlikely to with the ad partnership with facebook. goldman sachs and dst global are also on the list of potential sellers but they bought in to facebook relatively late. now, tomorrow's lockup expiration is just the

beginning. the real test may come in november when the biggest chunk of shares is freed up to hit the market. but people will pay attention to the decisions early investors make tomorrow. they're crucial indicator of confidence in the company. tyler? >> you bet they are. thank you very much, julia. we'll come back to you in a moment after bebring in jon fortt to talk about samsung which is unveiling a new version of its galaxy tablet today. hi, jon. >> reporter: hey, tyler. called the galaxy net 10.1. the same size as the ipod and same starting price and has a pen for drawing on the screen and built-in speakers getting good reviews and trying two lines of attack to gain ground on the ipad. targeting a creative niche apple used to do with the mac. that's the pen is about and the built-in speakers and popular s3

smartphone like the unique take on multitasking and the camera that knows when you're looking at the screen. if it can get a fraction of the people to buy a note instead of an ipad, that could be huge. samsung has a lot of ground to make up. data released at the patent trial last week showed apple is outselling samsung 20 to 1 in the u.s. >> stay with us. we want your views on a headline today and that is a group of retailers including walmart and best buy and target teaming up to develop yet another mobile payment application or platform. julia, is this already a crowded field, isn't it? >> it is absolutely. so here you have a dozen retailers launching what they call merchant customer exchange and going up against a number of different companies including google with google wallet and the mobile carriers launching a cab collation of ixis and starts trialing this summer and square

which last week announced its big partnership with starbucks and brings that a 3p mainstream and then there's paypal. now, the big question is here whether all of these options are just going to be confusing to people and discourage them from using any of these various options but one advantage that these retailers have, tyler, is the fact they have so much data about how and where and when people shop and they might be able to use it to their advantage. >> i guess, jon, this is a bit of a shot at visa and mastercard and the other credit card and processing companies because these companies, well, they don't want to pay them if they don't have and own the platform. there must be some companies in the infrastructure of these businesses that are going to make money off it, technology or software companies. >> well, i can tell you this is not so much about how the transaction is processed on the back end but knowing more about the customer at the register. a lot of these retailers don't know what the customers bought before swiping their credit card. visa has that information but

they don't. paypal trying to bring that tech nlg as you see it in to home depot and other locations and looks like those companies trying to band together and get the data to offer deals, things like that. google trying to get in the space and ap wl the passbook trying to get in there, too, tyler. >> thank you very much, julia, as well. when we come back, we'll analyze the analyst. calls on tap include agnico-eagle minds. barnes & noble and mcdonald's. first some big wednesday movers. people with a machine. what ? customers didn't like it. so why do banks do it ? hello ? hello ?! if your bank doesn't let you talk to a real person 24/7, you need an ally. hello ?

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we are watching the metals close. we're seeing a little bit of a reversal in silver. down most of the day heading towards the close here, it is higher following gold and take a look at gold. in the face of this mixed messages coming from the economic data, we have seen gold have very interesting reversals over the last couple of days, traders just not really willing to sell it. they pushed it down close to support. $1,590. certainly they're buzzing about paulson and company increasing their bets on the gld. and also, soros doubling down on the investments in the gold etf, as well.

they see that as a bullish sign. tyler, back to you. >> thank you very much. let's analyze the analysts. jeff kilburg is here to do it. i'm going to tee it up for you, big boy. downgrading barnes & noble noting, quote, we see three buckets of headline risks. eps, increased competition in the ebooks and increased competition in college. year to date, the stock down about 12%. agree with the downgrade or not? >> disagree. we are seeing the tablet war heat up and a story of david and golia goliath. microsoft is in the slingshot here and speak to a different consumer, ty. folks that like to read love the nook so, therefore, i think the price point lowering and a good position. here's an opportunity to get in here on this dip. >> all right. disagreement there. ubs downgrading agnico-eagle mines but increasing the price

target on the company noting over the most recent three-period aem appreciated by 2.3% versus 6% on average for our north american gold coverage universe. that's a mouthful. so they downgrade it but they raise the price target. >> i disagree with this, as well. it is convoluted and just like bertha was saying, people getting in gold anticipating central bank measures. this is the widest disparity since the price of gold and the miners in a long time. if you don't like it here you can get in to gds. that's the etf but i think they're going up. >> you disagree with that downgrade. mcdonald's removed from the u.s. focus list of credit suisse we outperform saying they're too big to escape macro pressures. shares basically flat over one year after five-year run that anybody would like to have had. >> i concur. i have to agree here. not loving it. seriously. there's too many headwinds for

food prices. rolling in to the drought coverage here all day. hurting mcdonald's. >> all right. there you got it. jeff, thanks very much. let's go to brian shact man for a market flash. >> this is mcf, interestingly enough, the same chairman and ceo since they formed in 1999. he's taking a medical leave to deal with a very serious health issue and that -- you see what happens when medical leave of a key ceo for this company, of course, down 8%. back to you. thank you, ty and when we come bc our special coverage of drought 2012, it is a terrible situation affecting a wide swath of the united states. it hasn't been this bad since the mid-1950s. when we come back, special coverage. we take it from the farmland to the grocery table to your wallet when we continue on a very special edition here of the cme on "power lunch."

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this footprint of drought is also the largest footprint of drought since december of 1966. >> the worst in five decades. drawing comparisons to the dust

bowl of the '30s. >> this is definitely a hard year for us as far as looking at what we have for corn. >> it's hitting everyone, from mid western farmers and ranchers to everyone in the usa. >> it pretty much baked the corn. >> today, we are covering this drought with the unprecedented resources of nbc, the weather channel and cnbc. from the corn fields to the grain pits in chicago to your grocery store, our special coverage of the drought of 2012 on "power lunch" begins right now. with sue herrera at the cme and tyler matheson at cnbc headquarters. >> and here we are. rejoining sue in just a moment. welcome to the special coverage. throughout the next 30 moneys we take you to the parched crop fields in the country, hear from the people most affected and bring in special coverage of the weather channel to get the long-range forecast to see whether there is any end in

sight. we're also going to meet a few people able to turn the drought of 2012 in to opportunity. sue is, of course, at the ce me in chicago and traders on the floor out there the first to tell us several months ago that this drought was a dog gone big deal. let's look at a map before we move any further today. released by the u.s. department of agriculture about 90 minutes ago. look at that. look at the red. it shows the severe drought across the u.s., from california all the way east in to, yes, georgia and florida and in between indiana, missouri, oklahoma, new mexico, totally covered by red. cnbc spoke with the head of the usda tom vilsack a few moments ago. listen in. >> well, when you're looking at nearly two thirds of the continental united states impacted by drought and severely so, we added counties to the disaster declaration list, we have 1,670 counties in the

united states now disaster counties because of drought. >> knows a lot about it. he was a former governor of the state of iowa. corn prices skyrocketing in the last three months, up 33%. 34% as you look there above $8 a bushel right now. wheat up 42% in three months. soy up 15% in that same time frame. in about a moment, sue speaks live with the governor of illinois. his state hard hit, as well, in this drought issue. but first, more on the money being left in the dust by this drought. we move on now to jane wells in nevada, iowa, with more on how one farmer is getting through the drought of 2012. >> reporter: tyler, ugly. they're going to be talking about the drought of 2012 for years to come. for old timers, it is bad. for young farmers, it's scary. >> we have gone from a disaster and productionwise to borderline

catastrophic event for agriculture. >> reporter: from farmer to farmer -- >> definitely, i mean, the highest prices we have seen. >> reporter: old macdonald had a drought. e i e i ouch. >> it crackles. no choice which you are in that leaf at all. >> reporter: mark kinny's family farming in iowa for 130 years. and each generation has had to survive its own great drought. this is his. >> don't kid yourself with $8 corn. the reason why we're there is because we got ears like this. >> reporter: kinny wishes high prices based on demand. the crop will be smaller, a lot smaller. but he'll survive, though he's concerned about next year. >> all sorts of rumors of the mississippi's too low to get barges of fertilizer up here. buy now. >> reporter: farming is the only way of life this 33-year-old has known and says no amount of planning or technology can ever erase the whims of mother nature. >> no amount of worry in the world will turn this guy, you

know, in to that guy. you know? i can want worry me a field of those. >> reporter: kinny says one thing that's helping is new generation of seeds, also helping in the forecast tomorrow, there may be rain. too late for rain. maybe not for soybeans and in '88 kinny says he got the weather report once a day at the radio and they had to stop and be quiet. bc to you. >> thank you very much. even if farmers harvest a crop, there's still big problems transporting it, especially if they're counting on shipping via the mississippi river. you heard that farmer talking about how it's affecting the route that runs missouri to louisiana. this year's drought brought old muddy down to the lowest level in years. really making it old and muddy. halting barge traffic in some cases. john yang is on the river in

mississippi. john? >> reporter: we're aboard the u.s. army corps of engineers drudge. it's sweeping up sentiment of the riverbed to deepen it and spewing it out to the channel. you talk about the grain shippers, grain farmers. 60% of u.s. grain is shipped on the mississippi river. a lot of it for export. taken down to new orleans for shipment around the world. a lot of those shipments are being slowed down because of the low river levels. they've got to lighten the load by about 25% so the barges are ride higher in the water. that means 25% less cargo being pushed in those barges. that's driving up shipping costs by millions of dollars. and those shipping costs got to get passed along somewhere. a lot to consumers and the end users. and this is not only reason why

that the army corps of engineers working hard to dredge the channels to make sure the channels is at least nine feet deep and 300 feet wide, they're moving the dredges around to keep it open. but also, the ports are in trouble because of the low water. some ports had to close temporarily. they can't get the barges close enough to the docks because the water is so shallow. this is a big impact on u.s. commerce here on the muddy mississippi. tyler? >> john yang, fascinating. thank you very much. the drought of 2012 dredged up conflict like no other drought in recent memory. big business versus tourism and america's farms. the three all joined together by the need of water and as the water dried up, tem flaring. phil lebeau is live in austin, texas, phil? >> reporter: tyler, typically you find dozens of boats in this

dock outside of the carlos and charlie's restaurant. but no. you have to go out about 150 yards before you find boat that is are docked on when's left of lake travis. the impact in this area, it's worth millions of dollars. >> we're talking fiscal impact of millions of dollars, upwards of $2 million. lots of jobs lost. and concern for the area continuing to thrive. >> reporter: one industry that's concerned -- boating. this is a huge area for people that do recreational boating. area generated about $4r5 million in boat sales in 2010 and last 3 years one retailer in the area says the sales are down about 30%. >> i don't think our water's been as low as it has last two years for maybe 40 years so that's kind of what we have been struggling with. >> reporter: and if you take a

look at shares of west marine, one of the boat retailing stocks which, you know, it's not going to be impacted by what's happening here at lake travis. what's happening here is more inkai indicative of other areas. this is 100 yards out before you get to the water. back the you. >> i always said phil could walk on water. he is sort of speak today. what is washington doing to help? diana olick is live in the nation's capital. >> reporter: we leaf of the nation's drought-stricken farmers is ever more political. president obama announced the purchase of $170 million of meat and fish bringing the total to $941 million for 1 billion pounds of food and slammed a new opponent on the farm bill which has little in it to help with the drought. >> so if you happen to see congressman ryan, tell him how

important this farm bill is to iowa and our rural communities. >> reporter: now, the farm bill is a huge document dealing large ri with government subsidies unrelated to the drought like food stamps and has some disaster aid but stuck in the republican-led house of representatives. a separate bill to open up federal lands for grazing passed the house this month and got hung up in the senate. democratic leaders want to include it in the farm bill. livestock producers want a waver on the renewable fuel standard for 40% of the crop used for ethanol. the epa would only issue a waver if it found the standard caused deep economic harm and that, tyler, is unlikely. >> diana, thank you very much. while the midwest suffers, farmers in the northwest are having a huge year. this winter's heavy snows out there mean a lot of water for irrigation. and that means washington apples, oregon grapes. they're doing just fine. they're going to benefit not only from higher nationwide prices but from a terrific

harvest out there, as well. straight ahead, the weather channel will weigh in, stats and facts on just how awful this drought is every state by state. why is it happening in the first place? what's behind it many we'll get the long range forecast at some point i's got to start raining again, right? also coming up, how some people have found a way to benefit from the drought of 2012. just how deep some people are digging to find a solution. this special edition of "power lunch" the drought of 2012 is back in two minutes. [ male announcer ] when a major hospital

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staying outdoors as they usually do, they're moving indoors. it is creepy to say the least. and ty, i got to tell you. this is one time i'm kind of glad i don't have a monitor. i don't think i could look at it. >> sue, please do not tell my wife joann. this is her worst nightmare. she has to -- >> mine, too! >> oh my goodness. just the idea of them coming in because it's so dry out there. let's move to folks who know what they're talking about, the weather. two meteorologists of the weather channel join us. mike bet ttes and maria larosa with the forecast. when will it rain again? >> you know, it's all about timing and location, location, location. mike, as you know, it's tough this season so far. >> historically speaking one of the worst droughts we have seen. i'm going to show you shortly how we got to this point and where we stand compared to old times. it's impressive. >> i'm going to start with where

we stand right now and if there's hope on the horizon. the mar harvest is not as bountiful as years passed. we have the feel of that, for sure. 2012 u.s. corn production expected to be 10.8 billion bushels, and that sounds like a lot but the smallest since 2006. so let's talk about where we are right now. in fact, let a little peek at the last seven days with the rain. along the eastern seaboard and southeast and not exactly where we need it to fall because you got some light rain in the mird section. looking at the drought monitor, see why. those dark areas, the red, we're looking at extreme drought. the lighter orange with 63% of the country, that's drought. and there you go. 24% of the extreme drought. as we look at the u.s. drought, where we're going from now until october, obviously, we're getting some improvement. phoenix, denver, you get help here and parts of the southeast where the long-term forecast giving us a little bit of a

beneficial rain. not so much, unfortunately, in the heart of where we're seeing the hardest hit areas, kansas city, chicago, dallas. all in the rbread basket. mike has more on the perspective. >> it's astounding. let's take you back to last summer. we had huge drought in the southern plains. texas, the worst. costliest in texas history. high pressure sitting over the southern plains. this year, however, it's expanded and intensified and slightly shifted off to the north. unfortunately, it has severely impacted the bread basket of america. all of the plains and the crop-producing states in the midwest. the moisture flow in to houston. so let's take a look in particular houston and break down the numbers for you here. last year, 10.5 inches of rain. to point, 38 inches of rain. 3 1/2 times this year compared

to last year and looking at state of mo m and sitting like st. louis. last year, a plethora of rain, 34 inches. this year, just 59% of that and that's had a huge impact on the corn and the bean crops in the state of missouri. go back to the drought in the '30s, the dust bowl. 80% of the country was considered to be in drought. this year, ranks at number five all time. and sue we anticipate 2012 to leapfrog number 4 and number 3 and going back to the dust bowl for a year worse than what we have this year. >> you know, from what i've been able to see, i think you are absolutely right but there are some companies that are profiting from it. take a look at shares of aqua america and american water. both stocks have been shooting higher this year. aqua water up 15%. american water up 20%. a small core of businesses, large and small, have been able to figure out how to profit from

the demise of others. and jackie deangelis is in kentucky for us. hi, jackie. >> reporter: good afternoon, sue. well, you're exactly right. we are here at american water's newest facility and built it two years ago in response to drought-like conditions. ceo tells us that without it they would be hard pressed to meet customer needs this year. now, this $164 million investment is already paying off due to increased pumpage here and elsewhere, american water has seen a significant impact of 6 to 9 cents on last quarter's eps and raised full guidance by 22 cents saying about 70% 0 of that is weather related. drought conditions are the worse they've been in 56 years and the majority of analysts, they still have a buy rating on water utility stocks including american water and aqua america but it's an interesting time for the water industry. they're reinvesting in that aging infrastructure and it

leaks more than 7 billion gallons of water a day and at issue, of course, reinvesting in that infrastructure is keeping costs down for consumers. >> we'll spend about 100 million more this year than we did last year, and really, for the long term we see $800 billion a year and could be more but we have to be careful about the impact on rates. >> reporter: now, he's absolutely right but another interesting thing to know about this facility is that it runs 100% remotely. a facility of like size and scale could take 40 people to operate it. sue, back over to you. >> jackie, thank you very much. and if you want more on jackie's story and the drought, you can, of course, go to cnbc.com for more of that. when we continue, there's a lot more ahead on "power lunch" an the coverage of the drought 2012. we'll take you to the pits to show you how the grains are

being traded right now and whether or not there's still a trade left in the grains and the beans. find out how they're making money when we come back. if the water won't come to you, you have to go to the water. no matter where it is. next up, a unique and difficult but tried and true way to hydrate. plus, how this drought is hitting the rest of america right in the pocketbook. and right on the dinner table. [ male announcer ] let's say you need to take care of legal matters.

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all right. as you know, since the summer drought began, take a look at shares of specific companies that have been moving. shares of john deere, tractor maker, of course, up and down. international's arena hitting the shares today, certainly. but the drought has been a major factor in their stock. check out archer daniels adm. we'll be back from the cme to show you how traders are making money here in the grain and the soybean and the livestock pits.

ty? >> all right. thanks very much. the coverage of the drought of 2012 now brings it all home to you, quite literally. nbc's janet shanlan in ft. worth, texas. it's been a listening day of shopping, janet. >> reporter: i was able to get shopping done in the interim to avoid the future price hike and what we'll all face here in the grocery store. this is the next target of the drought. it will impact all of us. average family of four the same food next year costs additional $600. experts telling us the price hikes could come by the end of this year. it's already withered corn crops, cracked the earth and sent ranchers scrambling to feed their herds. the next stop for this year's record drought is the nation's grocery stores. >> i think we're going to see price increases across the board because corn in particular is

such a ubiquitous product. it's used in the manufacture of most processed foods. >> reporter: it means price hikes down every aisle on products like cereal and chips but it's animal-based perishable foods expected to be hardest hit. beef, dairy, poultry, eggs and pork will increase the agriculture department says 3% to 5% next year. it adds an estimates $615 to the and grocery bill of a family of four. >> i'll be more careful of how much i'm buying so there's no waste. and be careful what i buy. >> reporter: experts predict shoppers use more coupons and switch to cheaper items to try to beat the rising cost of feeding a family. and of course, there will be implications for the broader economy. when families are spending more money for groceries here they're not spending it on travel, clothing, equipment.

seeing a lot of impacts beyond right here. sue, back to you. >> janet, thank you very much. you know, just a little bit south of here in missouri they're digging for water, literally. farmers are digging their own wells and ranchers are digging wells with help of the show-me state. 95% of missouri, 95% is suffering from extreme drought. so far, almost 4,000 landowners there received approval to drill a well. missouri's paying, however, 95% of the cost. the drilling costs for ranchers and for farmers. okay. when we come back, right here behind me is live cattle pit and we are going to talk about here at the cme how traders and hopefully investors are being able to profit of what's a very serious situation with the drought of 2012. we're back live from the cme with more on "power lunch." [ male announcer ] at scottrade,

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it's another reason more investors are saying... put me at 5 timesd out my greater risk of a stroke, my first thoughts were about my wife, and my family. i have the most common type of atrial fibrillation, or afib. it's not caused by a heart valve problem. i was taking warfarin, but my doctor put me on pradaxa instead to reduce my risk of stroke. in a clinical trial, pradaxa® (dabigatran etexilate mesylate) reduced stroke risk 35% better than warfarin. and unlike warfarin, with pradaxa, there's no need for regular blood tests. that's really important to me. pradaxa can cause serious, sometimes fatal, bleeding. don't take pradaxa if you have abnormal bleeding and seek immediate medical care for unexpected signs of bleeding, like unusual bruising. pradaxa may increase your bleeding risk if you're 75 or older, have a bleeding condition like stomach ulcers, or take aspirin, nsaids, or blood thinners, or if you have kidney problems, especially if you take certain medicines. tell your doctor about all medicines you take, any planned medical or dental procedures, and don't stop taking pradaxa without your doctor's approval,

as stopping may increase your stroke risk. other side effects include indigestion, stomach pain, upset, or burning. pradaxa is progress. having afib not caused by a heart valve problem increases your risk of stroke. ask your doctor if you can reduce your risk with pradaxa. welcome back to the cme. we are in the live cattle pit and, dan, how many minutes until the close? two and a half? >> two and a half. >> two and a half minutes until the close of trading so it's just enough time -- there you go. two and a half minutes to talk about how you can try and profit from this situation.

joining us is jared kit, director of market information at the lynn group. welcome. >> thank you. >> before the insanity starts, tell me what plays are still left in this particular arena because as i said the reason we're here is because the market anticipated the drought before investors really had an inkling of how bad it was going to be, so some people say the trade is played out. what do you say? >> well, we have really had a big run-up in corn and similar in beans and really what happened was the drought was important and really zapped the life was the heat and zapped the yields day by day by day and really in a consolidative phase right now. i wouldn't go outright long at these levels. >> in what market? any of them? >> in everything. let the market come to you. 50-cent break on the corn. dollar break of beans i'm a buyer. one of the favorite plays to

mitigate the risk here is to bull spread the markets. anything but the september contracts. >> you would buy the nearer term contract. >> correct. >> sell the contracts further out in to the year? >> correct. within this crop year. go out and buy this year's corn and sell the march corn and a play on the fact this is a short crop. and, you know, but we are' not saying the tops are in. you couldn't make new highs yet but a lot more risk. >> it's little risky. would you -- is there any other incidental market that you would trade other than corn, beans, wheat? anything? looking out six months you will have a story of livestock here. and in the near term. >> that's why we ore here at the pits. >> people have said we don't want to deal with -- >> going on right now. >> the next six months, traumatic. liquidation and then a very short cattle herd. and