Droughts, Record Colds Threatening Global Food Staple Supplies

Tuesday, April 23, 2013
By Paul Martin

ValueWalk.com
April 23, 2013

The continuing cold across the United States and Russia, in combination with a drought in Argentina and heat waves in Australia could cause a large decline in crop outputs from four of the world’s bread baskets. With global food supplies already coming under strain from a rapidly growing population, increasing economic development, and re-purposing food crops for products such as Ethanol, it’s fair to ask if 2013 could see a serious famine.

The growing season through much of the United States is just getting started and it’s getting off on the wrong foot. Kansas and other Great Plains states could see their winter wheat crops severely damaged by extended cold. Winter wheat is generally planted right after the fall harvest for spring wheat and is grown throughout the winter. While cold and even snow fall can be advantageous for the wheat, if the cold extends too far into the summer and spring, entire crops can be lost.

Winter wheat accounts for over 70 percent of the wheat grown in the United States. Right now, analysts are predicting that as much as 25 percent of the winter wheat crop could be lost to the continued cold. This could cause a dramatic rise in prices not just in the U.S. market, but around the world. The United States is now the world’s largest exporter of agricultural products and many nations without advanced agricultural sectors depend on cheap U.S. food staples to get by. The severe cold spell is also being compounded by a massive drought that could further destroy crop supplies.

Meanwhile, the world’s third largest wheat exporter, Russia, is facing a similar threat of combined record colds and a prolonged drought. Russia faced a warm spell earlier in the winter, which caused the wheat in some areas to begin to germinate. Should a late cold spell move through, it could destroy crops. And even without a frost, the continued dry spell could kill crops. Russia had been hoping to harvest some 95 million tonnes of wheat, but the risks of a prolonged dry spell has caused the government to scale back its expectations.

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