US drought could boost global food prices

By Mike Stones

- Last updated on GMT

Related tags: United states, Maize, Food and agriculture organization

The worst Mid West drought in 50 years could send global food prices rocketing
The worst Mid West drought in 50 years could send global food prices rocketing
Fears are rising that the US drought could boost global food prices even further after the United States Department of Agriculture (USDA) slashed its forecast for maize production by 17% on Friday, August 10.

The worst Mid West drought for half a century led the USDA to cut its US maize production figures to 274Mt from the July estimate of 329Mt. The forecast represents a 27% fall from its June figure of 375Mt.

Jack Watts, senior analyst with the Home-Grown Cereals Authority, said: “Early in the spring in response to the strongest plantings since the 1930s, the world was anticipating a recovery into global feed grain supplies, however the events of the grain situation is in fact likely to get worse rather than better than last year.”

The USDA is basing its lower production on a rise in crop abandonment, from 7.8% to 9.07%, and lower average yield forecasts. The yield prediction fell by 15.5% from the July estimate to 7.73t/ha (123.4bushels/acre).

Lowest level

“If realised this would be the lowest level of US maize production since 2006/7 and lowest yield since 1995/96,”​ said Watts.

José Graziano da Silva, director general of the Food and Agriculture Organisation (FAO) urged the US government to halt subsidies for the production of ethanol, which is mixed with petrol to make ”greener” fuel.

"An immediate, temporary suspension of that [US government] mandate would give some respite to the market and allow more of the crop to be channelled towards food and feed uses,"​ said Silva.

The FAO's food price index, which measures monthly cost changes for a food basket of cereals, oilseeds and others, reached 213 points, a rise of six points over the past month.

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