Posted By Levi
July 19th, 2012 6:28pm
Category: Global Warming
The effects of global warming are now bearing down on us with a vengeance.
Drought in U.S. reaching levels not seen in 50 years, pushing up crop prices
A drought gripping the Corn Belt and more than half the United States has reached proportions not seen in more than 50 years, the government reported Monday, jacking up crop prices and threatening to drive up the cost of food. . . Last week, the Agriculture Department declared more than 1,000 counties in 26 states as natural-disaster areas. . . .
Corn is among the most valuable of U.S. crops, and its price has multiple economic ripple effects, reaching into food and energy markets. Rising corn prices mean higher costs for beef producers that use it to feed their livestock. The increase also means that some fields planted with other crops will be shifted into corn production. And a corn price spike can put upward pressure on the price of ethanol, which consumes more than a third of the U.S. harvest. Over the past two months, the price of a bushel of corn has risen more than 50 percent to $7.72.
Drought Conditions Send Commodity Prices Skyrocketing
The world is facing a new food crisis as the worst US drought in more than 50 years pushes the agricultural commodity prices to record highs. Corn and soyabean prices surged to record highs on Thursday, surpassing the peaks of the 2007-08 crisis that sparked food riots in more than 30 countries. Wheat prices are not yet at record levels but have rallied more than 50 per cent in five weeks, exceeding prices reached in the wake of Russia’s 2010 export ban.
The drought in the US, which supplies nearly half the world’s exports of corn and much of its soyabeans and wheat, will reverberate well beyond its borders, affecting consumers from Egypt to China. “I’ve been in the business more than 30 years and this is by far and away the most serious weather issue and supply and demand problem that I have seen by a mile,” said a senior executive at a trading house. “It’s not even comparable to 2007-08.”
Grocery prices headed higher as drought lingers
Shoppers across the country should stand up and take notice of the Midwestern drought that has already hurt supplies of corn and soybeans. The drought will lead to higher supermarket prices for everything from milk to meat. How high will depend on what happens with rain and high temperatures in the Corn Belt in the next few weeks.
In a twist that may sound counterintuitive, prices in the next few weeks for certain products may end up being major deals as a result of the drought. For example, you may want to make room in your freezer for meat because prices for beef and pork are expected to drop in the next few months as farmers slaughter herds to deal with the high cost of grains that are used as livestock feed, said Shawn Hackett of the agricultural commodities firm Hackett Financial Advisors in Boynton Beach, Fla. But, he added, everything from milk to salad dressing is going to cost more in the near term, and eventually the meat deals will evaporate as demand outstrips supply.
Image source:Think Progress