Damaged U.S. Corn Crop Pressures Global Supply
The U.S. is reaping its smallest corn harvest in three years after a drought damaged what was a record crop as recently as July, driving annual prices to an all-time high and curbing an expansion in global food supplies.
The government will forecast production of 314.7 million metric tons tomorrow, 27.4 million tons less than four months ago, the average estimate of 30 analysts surveyed by Bloomberg showed. The cut is equal to output in Argentina, the second- biggest exporter.
The U.S. Department of Agriculture already expected a third annual drop in global corn stockpiles and the first in soybean inventories in three years, offset by an expansion in wheat reserves to the largest in a decade.
Corn, used mostly to make livestock feed and ethanol, is the only one of eight members of the Standard & Poor’s GSCI Agriculture Index to gain this year. At a time when global food prices tracked by the United Nations fell 9.1 percent from a record in February, U.S. consumers are paying the most ever for pork chops, ground beef, flour and cheese. World food costs are 68 percent higher than five years ago and combined corn, wheat and soybean stockpiles are dropping to a three-year low, data compiled by Bloomberg show.
“The situation has improved, but it remains tight,” said Michel Portier, the head of Agritel, a Paris-based adviser to about 2,000 farmers. “The smallest weather problems could cause a price jump. For now all goes well, but it’s clear that on a global level, we still need a good harvest in 2012.”