Corn climbed to a record near US$8 a bushel as floods damaged crops in the US, the largest producer and exporter, threatening global food supplies.
The flooding may be the worst in the Midwest since 1993 and will probably cause “hundreds of millions of dollars” of damage, the National Weather Service said.
US corn stockpiles may fall 53 percent to a 13-year low before next year’s harvest, the US Department of Agriculture said on June 10.
PHOTO:AFP
Record crude oil, wheat, rice and soybean prices this year have driven inflation, forcing governments to increase interest rates as the economy slows and raising production costs. Food and fuel costs have eclipsed the credit squeeze as the greatest threat to the world economy, the G8 said.
“Inflation pressures are building around the world,” stoked by food and fuel prices, David Cohen, director of Asian economic forecasting at Action Economics in Singapore, said by phone yesterday. That’s “squeezing household budgets, especially the poorest, and company profits.”
Corn gained as much as 3.5 percent to US$7.9150 a bushel in Chicago and has advanced 33 percent in the past two weeks. It’s up 86 percent in the past year on record demand for biofuels and livestock feed as rising Asian incomes increase meat consumption.
High food prices “are here to stay” as governments divert resources to make biofuels, amass stockpiles and limit exports, Peter Brabeck-Letmathe, chairman of Nestle SA, the world’s largest food company, said in an interview in Kuala Lumpur yesterday.
“Elevated commodity prices, especially of oil and food, pose a serious challenge to stable growth worldwide, have serious implications for the most vulnerable and may increase global inflationary pressure,” G8 finance ministers said in a statement released after a meeting in Osaka, Japan, on Saturday.
Consumer prices last month probably rose the most since 1997 in the UK and the fastest in 16 years in the euro area, while US producer prices are predicted to have gained 1 percent from April, according to economist forecasts.
More thunderstorms were expected on Sunday in the US Midwest, Accuweather.com forecast. As much as 30cm of rain dropped in the Midwest last week, and some fields had five times the normal moisture since the end of last month, the National Weather Service said.
Meanwhile, Argentine farmers intensified protests against higher export taxes after a farm leader was arrested by police, threatening to spark food shortages and halt the flow of grains in the country. Farmers began their fourth strike in three months on Sunday, withholding crops and blocking roads.
The country is the world’s third-largest soybean exporter behind the US and Brazil, and second only to the US for corn.
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