Crop prices soar as climate and demand hammer markets

Scorching summer heat in South America is cutting harvest forecasts in one of the world’s critical farm belts, helping to propel crop prices to new two-year highs and fuelling concerns about global supplies. However, a new study has revealed how resourceful farmers have been in the past to facing new conditions. Dry weather, considered to be influenced by the La Niña weather pattern, is already damaging fields in Argentina, which will be the world’s second largest corn exporter this crop year and third largest soya bean exporter, according to US analyses. The weather is also threatening crops in southern Brazil and Uruguay — which declared a state of emergency last month for farmers in the north of the country. The region’s key role in world food markets means any production problems there could have effects around the world. Weather forecasters saw little potential rain to alleviate the extreme heat at the beginning of the year, which could limit production further, as recently planted corn and soya beans would have reached a critical stage of development. The rise in food prices could pose a threat to global growth if fastgrowing nations try to slow their economies to contain food inflation. China has raised interest rates twice in just over two months to fight inflation. The UN’s index of food prices — an international basket comprising wheat, corn, dairy produce, meat and sugar — stands at its highest since the index started in 1990 and surpasses even the peaks seen during the last food crisis in 2008, which prompted civil disturbances from Mexico to Indonesia.