Federal forecasters are predicting record prices for corn and soybeans, raising fears of a new world food crisis as the worst U.S. drought in half a century continues to punish key farm states. The U.S. Department of Agriculture on Friday said production of U.S. corn and soybeans is expected to be down 17 percent from its forecast last month of nearly 13 billion bushels, and 13 percent lower than last year. It was the second month in a row when the USDA has cut its production estimate. Corn prices briefly surged to a record on the USDA's forecast, but then retreated because the government said demand for the grain would fall due to its soaring cost.
Federal forecasters are predicting record prices for corn and soybeans, raising fears of a new world food crisis as the worst U.S. drought in half a century continues to punish key farm states.
The U.S. Department of Agriculture on Friday said production of U.S. corn and soybeans is expected to be down 17 percent from its forecast last month of nearly 13 billion bushels, and 13 percent lower than last year. It was the second month in a row when the USDA has cut its production estimate.
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Corn prices briefly surged to a record on the USDA’s forecast, but then retreated because the government said demand for the grain would fall due to its soaring cost.
The USDA's first official assessment of the impact of the drought that has ravaged the nation’s Corn Belt is based on samples from parched, scorched fields, which are now expected to produce corn yields 25 percent below normal.
Inventories of soybeans, a key component of livestock feed from India to Indiana, are expected to be the smallest in nine years, the government report said.
The grim report is an abrupt reversal from just two months ago when farmers, making the largest corn plantings in 75 years, expected a record haul. Consumers worldwide were also hopeful that a robust harvest from the biggest agricultural exporter would help end a period of depleted global stockpiles.
Now, however, many fear record-high prices and meager stockpiles will rule commodity markets for at least a year more -- and it may worsen if growing signs of shortages prompt some countries to impose export bans or make panic purchases, as they did during the last dramatic price spike in 2008.
Map credit National Drought Mitigation Center.
Read more at NBC News.
