US slashes corn production forecast as drought raises crisis fears

From The Guardian UK:

Severe drought affecting midwest adds to fears of global food crisis and sends some commodity prices to record levels, Friday 10 August 2012

The US government slashed its forecast for drought-hit corn production by 17% on Friday, raising fears of a new global food crisis and sending some commodity prices to record levels.

The US department of agriculture said corn output would only reach 10.8bn bushels for 2012-13, while yields were likely to be 123.4 bushels per acre – the lowest return for 17 years.

Predicted soybean production has also been slashed from 3.05bn bushels four weeks ago to 2.7bn on Friday as farmers see crops devastated by the country’s worst drought in more than half a century.

The latest reduction in estimates propelled corn futures on the Chicago commodity exchange to $8.30 a bushel and accelerated a 60% increase in prices over the last two months.

The US is the biggest producer of corn, soybeans and wheat in the world and a poor harvest means prices will rise and stockpiles will remain depleted.

The key midwest growing area has been hit by the worst drought in 56 years. The department of agriculture earlier this week said that half of the nation’s corn crop was rated poor to very poor while the latest US drought monitor map showed conditions continuing to worsen.

The National Oceanic and Atmospheric Administration reported on Wednesday that the first seven months of 2012 were the warmest on record for the nation; temperatures in July broke a record high that was set in the Dust Bowl of the 1930s.

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