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As Drought Hits Key Crops, Fears of Food Crisis Loom

As commodity speculators seek to profit from diminished yields, the world's poorest pay the price

by
Common Dreams staff

Corn crops in the US are failing due to a prolonged drought in the Midwest. The low yield is pushing up food prices across the globe. (Photograph: Eric Gay/AP)

Fears of a continued heatwave and drought across the US midwest -- which many scientists credit to climate change associated with global warming -- are leading analysts to predict lower yields of corn, soybean, and wheat in the nation's agricultural belt this growing season. The market predictions that parallel these kinds of droughts can drive global food prices up wildly, as happened during the food crisis of 2008, when commodity speculators exacerbate the price of these staple crops.

According to a market report in Reuters, "Relentless heat in the key US corn- and soybean-growing areas of the United States drove benchmark Chicago corn to a 10-month high on Tuesday, while soybeans jumped to their strongest values since 2008, with worries building about the bottom-line impact of drought on world supply. U.S. wheat also hit a 10-month high, tracking corn's rally."

As a result of these and similar reports by industry analysts, reports The Guardian, large speculators bolstered their bets on further rises in prices. "Hedge funds have become key speculators on commodity prices in recent years," writes economic correspondent Philip Inman, "and [data] showed they and other firms spent the last week betting prices were set to rise."

James Goodman, an associate professor at the University of Technology in Sydney, notes in The Age that in the two years leading up to the 2008 food crisis the price of food staples like corn and wheat doubled, forcing an additional 180 million people into destitution.

"Speculation on food prices was big business after the US lifted its ban on the practice in 2000," Goodman writes. "About $13 trillion surged into food commodities from 2006, and then out again in 2008, and then back in again by 2011."

"The debt, food and climate crises are the key drivers of global poverty," he argues. And if current conditions follow the 2008 pattern, experts warn it could prove a very rough road ahead for the world's food insecure.

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