As the worst U.S. drought in half a century continues in the nation’s midsection, concerns are rising that commodity prices may spur another bout of global food-price inflation.
Surges in food costs in 2008 and 2011 sparked civil unrest in developing countries.
Amid shrinking crop forecasts, corn prices have jumped 56 percent and soybeans 28 percent since mid-June.
“There’s not much reason for us to see a slowdown in the price rally,” said Erin FitzPatrick, an analyst at Rabobank International in London. “The size of the 2012-13 harvest is shrinking every day that we don’t get rain or a cooling off in the U.S.”
More than half the contiguous U.S. states were in moderate to extreme drought at the end of June, the highest percentage since December 1956, according to the National Climatic Data Center. The drought may persist in the Midwest for the rest of the growing season, the U.S. government said this week.
Thirty-one percent of the U.S. corn crop was in good or excellent condition as of July 15, the least for that date since 1988, according to the U.S. Department of Agriculture. Thirty-four percent of soybean fields received the top ratings, also the worst since 1988.