In the last five months, the US has lost around 100m tonnes of crops, predominately in South America and the US grain belt, an area which has been struggling with over 37.C degree (100F) temperatures.
Maize prices have risen by 40 percent and soya bean by 25 percent. These crops are then converted into other food stuffs, like animal feed, which consequently results in higher meat prices.
The US is the biggest producers of corn and as costs surged to record highs on Thursday, serious concerns have been sparked among economists and traders that there will be a detrimental effect on developing countries. The government has had to cut its yearly forecasts for corn production from a predicted 14.8bn bushels to 12.9bn.
Yesterday’s trading figures for corn were priced at $8.16 a bushel and there is speculation rates could hit as high as $9 a bushel by August. Rice, a staple food for some of the world’s poorest countries, seems to have emerged unscathed from the price hikes.
Some ministers have argued the current situation is nowhere near as bad as the shortages were a few years ago, which caused food riots in over 30 countries and around one billion people were going hungry.
“Prices are higher, and there’s no question about that, but we really had an extreme shortage of wheat in 2007-2008 and I don’t see that at this point,” said Chief economist at the US Department of Agriculture Joseph Glauber.
However, a senior executive at a trading house told the FT the situation is “not even comparable to 2007-2008.”
“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,” he said.
Tom Vilsack, the US agricultural secretary told ministers “if I had a rain prayer or a rain dance I could do, I would do it.”