Global Food Reserves Falling As Drought Wilts Crops
http://www.bloomberg.com/news/2012-08-08/global-food-reserves-falling-as-drought-wilts-crops-commodities.html
Stockpiles of the biggest crops will decline for a third year as drought parches fields across three continents, raising food-import costs already forecast by the United Nations to reach a near-record $1.24 trillion.
Combined inventories of corn, wheat, soybeans and rice will drop 1.8 percent to a four-year low before harvests in 2013, the U.S. Department of Agriculture estimates. Crops in the U.S., the biggest exporter, are in the worst condition since 1988, heat waves are battering European crops and Indias monsoon rainfall already is 20 percent below normal. The International Grains Council began July by forecasting record harvests. It ended with a prediction for a 2 percent drop in output.
The speed of the destruction drove corn prices to a record today and soybean prices to an all-time high last month, while wheat went to a four-year high. For investors, crops are the best-performing commodities this year, and Goldman Sachs Group Inc., Macquarie Group Ltd. and Credit Suisse Group AG say the trend will continue. An index of 55 food items tracked by the United Nations Food & Agriculture Organization jumped 6.2 percent in July, the biggest increase since November 2009, the Rome-based agency reported today, less than two years after record prices pushed 44 million people into extreme poverty and contributed to uprisings in North Africa and the Middle East.
People thought we were going to be swimming in corn by the end of the year, said Kelly Wiesbrock, who helps manage $1.3 billion of assets for Harvest Capital Strategies, a San Francisco-based hedge fund. Then the month of June hit and into July, and its just been a train wreck.