World output of crops such as corn, soybeans and wheat is expected to drop 2.1% due to droughts in parts of Europe and excessive rains in the U.S., Canada and Australia, according to analysts.
The decrease in output coupled with a rise in demand is causing prices to rise significantly. The price of corn, for example, jumped 89% in the last year, reaching a 30-month high on Feb. 7. Soybeans are up 54% from a year ago and wheat has hit its highest price since August 2008. "There is not one crop you can point to that is without supply problems," said Steve Nicholson, a commodity procurement specialist for International Food Products Corp. "Production is not keeping up with demand, exacerbating the global food crisis."
The global production of corn, soybeans and wheat is forecast at 1.717 billion metric tons, down from 1.755 billion metric tons in 2010, according to the U.S. Department of Agriculture. The forecast for U.S. corn reserves will likely be adjusted down 2.1% to 729 million bushels, the lowest since 1995 and down 57% from a year earlier. World corn inventories may be cut to 125.4 million tons prior to the Northern Hemisphere harvests, the lowest number since 2007.