by Christopher Freeburn | July 5, 2012 10:04 am
With the American Midwest currently broiling in a heat wave, U.N. officials are predicting that the harvest shortfalls arising from the heat will cause food prices to rise around the world.
Grain prices on world markets have already risen to 2007-2008 levels after the U.S Department of Agriculture downgraded corn and soybean crops due to the extreme heat, Reuters noted.
U.N. officials warned that the remaining summer months would “be quite bumpy” in terms of grain prices. World food prices had declined for three months, but are expected to rise in July.
Corn has become a the primary market concern. Analysts are closely watching U.S. production, and any deviation from forecasts could send prices soaring. Soybean prices are already at the highest level since 2008.
In response to the heatwave, the U.N.’s Food & Agriculture Organization has reduced its estimate of global cereal production to 2.396 billion metric tons. With abundant rice and wheat production, and reduced demand due to the global economic slowdown, the U.N. doesn’t forecast a worldwide food shortage in the coming year.
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