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Less than a year after the worst drought in a generation destroyed one-third of Russia’s wheat crop and sent global food prices surging, more adverse weather is damaging fields from North America to Europe to Asia.

Corn planting in the U.S., the world’s largest grower, is advancing at half of last year’s pace because of excess rain, government data show. The Canadian Wheat Board said fields are so muddy that only 3 percent of grain has been sown, compared with 40 percent normally. At the same time, drought left the Kansas wheat crop in the worst shape since 1996, and dry spells are threatening crops in France, Western Australia and China.

While the growing season is still early in the Northern Hemisphere, corn futures as much as doubled in the past year as U.S. stockpiles headed for a 15-year low, and wheat is up 55 percent from a year earlier. The United Nations says global food costs advanced in April for the ninth time in 10 months, and higher commodity expenses led food makers including General Mills Inc. and McDonald’s Corp. to boost prices to consumers.

“We needed everything to go perfectly, but there’s really a lot of potential for problems, based on these weather issues,” said Sterling Liddell, a vice president for food and agribusiness research at Rabo AgriFinance in St. Louis, who expects corn to reach a record $8 a bushel if conditions worsen. “It could be a very explosive situation, because we’re already so tight.”

Reduced Inventory
In a report tomorrow, the U.S. Department of Agriculture probably will cut its forecast of global corn reserves before this year’s Northern Hemisphere harvest to 122.5 million metric tons, the lowest in four years, according to a Bloomberg News survey of 14 analysts. The U.S. is the world’s biggest exporter of corn, soybeans, wheat and cotton.

While the survey showed corn inventories probably will rebound to 125.4 million tons next year, as higher prices spur farmers to plant more, some analysts expected further declines before the 2012 harvest.

Weather, especially in the U.S., may be the “swing factor” for rebuilding global grain inventories, said Dan Manternach, a wheat economist with Doane Advisory Services, an agricultural research company in St. Louis.

“Things are so tight, if Mother Nature so much as hiccups on adverse weather, it can be unusually bullish for commodities,” Manternach said...

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Dry weather in France and Germany and the U.K.’s hottest April in at least 352 years are threatening crops across the European Union, producer of one-fifth of the world’s wheat.

“We’re definitely going to be producing less grain than we can consume,” said Andrew Dewing, the owner of Dewing Grain in Aylsham, England. “That doesn’t bode well for next year.”

Parts of Western Australia have had the lowest rainfall on record for the past 16 months, according to the country’s Bureau of Meteorology. The government in Manitoba, Canada, has declared a state of emergency because of floods. Wheat output in China, the world’s biggest consumer, may decline for a second straight year because of dry conditions, Tommy Xiao, an analyst at Shanghai JC. Intelligence Co., said on May 5.

China Drought
Drought conditions may persist in wheat-growing areas from China, the world’s largest grower and consumer, to the U.S. and Western Europe, hurting crops and lifting prices, British Weather Services said on May 6.

Last modified: 2011-05-10 01:11:35 by mo