The global warming and other global climate changes are getting more and more evident. More people around the globe start feeling the consequences of the human impact on the climate of our planet. While some regions are suffering with droughts, others are in danger of being flooded.
Obviously, such extreme weather conditions cannot by affect harvests. The world may face a food crisis. How serious is the danger and what are the major reasons?
Unprecedented Droughts In USA: New Trend In Global Food Markets
According to Eugene Olkhovsky, ’s leading expert, the unprecedented droughts currently seen in the USA, Europe and Russia may become the major reasons for a possible food crisis. These are the countries that have always been lifesavers during for starving regions. Now they may found themselves in involved in a severe food crisis.
The USA, one of the world’s major food producers and exporters, is currently suffering from the severest drought in over 50 years. 26 states (55% of the US territory) have already been announced disaster areas. The last time the USA saw such a disastrous drought was 1956. However, most experts say that if the drought continues, the situation may become even worse (like it was in 1936, when the Americans lost almost the entire harvest of corn). The dry weather is expected to last for 2 more weeks.
The US crops will are seeing major damage. For now, the SSDA expects that up to 30% of the overall harvest will be lost.
The US drought has had a major negative impact on the global market of crops. At the same time, much poorer harvests of soybeans and wheat will affect both the domestic consumption and the export to Egypt and China.
Soybeans
Wheat:
Global Food Crisis Ahead?
July’s report published by the USDA says that the global production of wheat is expected to decline by 6 million 700 thousand tons. This concerns all agricultural countries. The USA is not the only country suffering from droughts. The same holds true for Brazil, Argentina, Uruguay and Paraguay. Russia, Ukraine and Kazakhstan have already downgraded their forecast for wheat.
China and EU countries are also expected to gather poor harvests. Last week. Strategie Grains downgraded its forecast for grains by 600 thousand tons down to 123.6 million tons.
According to the International Grains Council, by the end of the 2012-2013 marketing year, the global reserves of grains will shrink by 9 million tons, thus reaching the lowest level in 5 years.
The droughts are also affecting the global harvest of coffee. The coffee futures contract is still fluctuating within the $177-190/b range. The major reason for the rally was the mass closure of short speculative trades in advance of the new harvest supplies from Brazil. Later on, the price went back into the range. The previous USDA report was bearish. However, heavy rains in Brazil’s major coffee growing regions became a bullish driver.
Global Crop Failure: Possible Consequences
Luckily, no analysts are seriously considering the possibility of a major food crisis. Last year’s harvests were abundant. Therefore, most countries around the globe still have abundant reserves, even such overpopulated countries as China and India.
For example, Russian analysts say that Russia’s reserves will be enough to supply the domestic needs and to export crops to those who will be in need.
However, there will be 2 major consequences of the dry summer of 2012:
1. Higher food prices
2. Lower food export (humanitarian aid) to starving nations
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Will the world face a major food crisis in 2012-2013?
