The smallest corn inventories in 37 years are a sign farmers around the globe are failing to produce enough grain to meet rising consumption, even as planting expands and food prices surge.
Growers from Canada to Russia boosted annual output of wheat, rice and feed grain by 16 percent since 2000, not enough to keep up with the 20 percent gain in demand, U.S. Department of Agriculture data show. While a Bloomberg survey of 25 analysts shows the agency on Feb. 24 may forecast a 3.5 percent increase in U.S. corn planting, the government says world stockpiles will equal 15 percent of use, the lowest since 1974.
Global inventories for all grain will drop 13 percent before the next harvest, the USDA estimates. That’s the first decline since 2007, when surging food prices sparked more than 60 riots from Haiti to Egypt. Increasing demand is causing isolated food shortages and accelerating inflation in developing countries even as it boosts farmers’ incomes and shifts planting strategies.
“We need to grow a huge crop this year to meet global food needs,” said Paul Jeschke, 58, who farms 3,600 acres (1,457 hectares) near Mazon, Illinois, and plans to boost corn planting by 50 percent because the crop is as much as $200 an acre more profitable than soybeans at current prices. “The increased demand for meat and dairy is driving demand for corn and soybeans.”
Rising incomes in developing countries are boosting food prices as people eat more meat and dairy products from crop-fed livestock. U.S. subsidies are fueling demand for ethanol made from grain, while droughts and floods in 2010 damaged global harvests. (more)
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