As Drought Hits Key Crops, Fears of Food Crisis Loom
Tuesday, July 3, 2012
Fears of a continued heatwave and drought across the US midwest — which many scientists credit to climate change associated with global warming — are leading analysts to predict lower yields of corn, soybean, and wheat in the nation’s agricultural belt this growing season. The market predictions that parallel these kinds of droughts can drive global food prices up wildly, as happened during the food crisis of 2008, when commodity speculators exacerbate the price of these staple crops.
According to a market report in Reuters, “Relentless heat in the key US corn- and soybean-growing areas of the United States drove benchmark Chicago corn to a 10-month high on Tuesday, while soybeans jumped to their strongest values since 2008, with worries building about the bottom-line impact of drought on world supply. U.S. wheat also hit a 10-month high, tracking corn’s rally.”
As a result of these and similar reports by industry analysts, reports The Guardian, large speculators bolstered their bets on further rises in prices. “Hedge funds have become key speculators on commodity prices in recent years,” writes economic correspondent Philip Inman, “and [data] showed they and other firms spent the last week betting prices were set to rise.”