Global Demand Outpaces Grain Crops
August 23, 2010
The world’s need for meat, flour and ethanol is expanding faster than the supply of the crops needed to produce them, depleting inventories and increasing the chance of higher food prices, reports Bloomberg News. Wheat stockpiles are expected to slip to a two-year low as demand rises and a drought damages the crop in Russia, the U.S. Department of Agriculture said this month. Inventories of corn, used to feed livestock and make fuel, will be little changed from a year earlier, even as output rises to a record, the USDA said. Russia’s worst dry spell in 50 years sent Chicago wheat futures to a 23-month high at one point this month. Corn prices are up 24 percent in the past year, as ethanol mills use 35 percent of the grain produced in the United States, the world’s largest exporter, and rising global incomes lead to more beef and pork consumption. World food prices rose in July for the first time in three months on higher costs for cereals and sugar, the United Nations’ Food and Agriculture Organization said. The USDA said last month that meat prices will rise faster than expected this year at 2 to 3 percent.