OUR drought sharply reduces crops from the US agricultural belt to the Yangtze River basin in China, increasing the risk global food crisis and speeding it up inflation.

The final clue comes from the American Midwest, where the corn is so dried up that the cobs are missing and the soybeans are smaller and smaller than usual. Sad report from the organization Professional Farm Tour helped lift the grain price index to its highest level since June.

People are desperate to make up for it grain reserves which declined due to Black Sea trade disruptions and adverse weather conditions for some major crops. But an industry tour of US fields last week surprised more optimistic market participants with reports of widespread crop damage due to heat and drought.

Drought affects Europe, China and India, while export prospects from Ukrainethe largest exporter of corn and vegetable oil, is difficult to predict against the background of the Russian invasion.

“Even before the crop news broke this week, I was worried that we wouldn’t see a significant rebound in stocks until 2023,” said Joe Klauber, a former USDA chief economist who is now a senior scientist. . at the International Food Policy Research Institute in Washington DC.

He added that “fortunately, Ukrainian ports have opened, but export volumes remain very low.

Grain stocks have plummeted due to weather conditions and the Russian invasion of Ukraine.

While prices for corn, wheat and soybeans have fallen from recent record highs, futures remain highly volatile. Bad weather between now and the end of the harvest could push prices up again.

Food shortages already contributed to the downfall of the Sri Lankan government earlier this year when the country ran out of hard currency needed to pay for imports.

The United Nations Food and Agriculture Organization’s index, which tracks food prices, fell last month from June, though it remains 13 percent higher than the same period last year.

In the US, corn is the most dominant crop, and a crop failure will have repercussions throughout the global food supply chain, increasing pressure on South America to have bumper crops early next year. This is especially true if China, which has been suffering from the worst drought since the early 1960s, is forced to import more grain to feed its vast herds of livestock and support its domestic herds.

The US authorities estimate that US production will be 4% below the government’s official forecast. The sting follows a drought-induced shortage of winter wheat in the US, as well as soybeans in Brazil, the largest producer.

The outlook for global agriculture in 2023 is worrying market watchers. For the first time in more than 20 years, the world is experiencing a rare third consecutive year of La Niña, when the equatorial Pacific Ocean cools, causing the atmosphere above it to react. This could have devastating effects on drought in the US, as well as vital crop areas in Brazil and Argentina.