Americans can expect to pay higher food prices next year, because of expectations that an unseasonably hot summer damaged much of this year’s corn, soy bean and wheat crops.
U.S. Agriculture Department estimated Thursday that the fall harvest won’t yield as much corn as first estimated. Hot, Dry weather in the south and flooding in the Midwest and Mississippi valley regions. In key U.S. grain growing states weather has damaged about 4+ percent of this years crop yields. The price of corn jumped 26 cents to $7.14 a bushel after the report was released. That’s almost twice the price paid last year.
Corn, soy and wheat are used in everything from livestock feed, ethanol production, bread, cereal to soft drinks. Traders worry that grain shortages could return next year because of the damaged crops. Farmers are expected to have a surplus of 940 million bushels when the harvest begins next month, the USDA said. That’s roughly a 26-day supply of corn, slightly more than the previous month’s estimate. But the USDA said the corn surplus could dwindle this fall to only 714 million bushels about a 20-day supply.
Global demand for corn, soybeans and wheat has outstripped production for the last 10 years. Surpluses, vital to a stable food supply, have shrunk. When surpluses drop as low as they are now, even relatively small declines in supply can send crop prices sharply higher on global commodities markets. Traders are watching the USDA crop reports, looking for any sign that the crop harvested this fall will be smaller than expected.
Why is common sense so uncommon?
Don’t be shy. Leave me your Comment(s)