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American drought, El Nino driving world to food crisis
Global alarm over a potential repeat of the 2008 food crisis escalated after data showed food prices had jumped 6% last month and importers were snapping up a shrivelled US grain crop, helping drive corn prices to a new record.
Global alarm over a potential repeat of the 2008 food crisis escalated after data showed food prices had jumped 6% last month and importers were snapping up a shrivelled US grain crop, helping drive corn prices to a new record.
The US is the world’s largest agricultural exporter, and is especially dominant in the area of grains.
Ahead of a critical US government report on the state of the US corn and soybean crops, which have been decimated by the worst drought in over five decades, the United Nation’s food agency warned against the kind of export bans, tariffs and buying binges that worsened the price surge four years ago.
“There is potential for a situation to develop like we had back in 2007-08,” the Food and Agriculture Organisation’s senior economist and grain analyst Abdolreza Abbassian told Reuters.
Adding a further risk of strain on global food supplies, Japan’s official weather bureau said on Friday its climate monitoring data and models indicated the El Nino phenomenon had already emerged and was likely to last until winter.
So far, most governments have refrained from trade intervention. Russia’s deputy prime minister said this week he saw no grounds to ban wheat exports, as the country did in 2010, but he did not rule out protective export tariffs after the end of the 2012 calendar year.
Abundant rice supplies, sluggish economic growth and relatively lower oil prices may also help temper the rally in prices, Abbassian added.
But signs of unusually large early buying and extra stockpiling are emerging. US corn export sales over the past week jumped to the second-highest in 10 months, if the sales figure includes a near-record one-time purchase by private importers in Mexico, the world’s No 2 importer.