Foiled Food Futures Raise Fears in U.S.

Dramatic sway in prices over short time-span 

By Matt Lewis

The Weekend edition of the Financial Times reported that the agriculture futures market is suffering. What does this mean for Arizona; well the verdict is still out. Jack Farchy writes that the searing heat and lack of rain has decimated crops, in particular Corn – a key component of Ethanol, an alternative fuel source. The comparisons harkening back to the 2007-08 yields and the yields of the 1980’s.

The British-English newspaper (that’s based in New York) displayed a graphic depicting the American losses of each crop. Rice was down nearly 43 percent. Wheat was down about 34 percent and Soybeans were down almost 2 percent. Corn, however, which has been a big loser this season, actually made gains in recent weeks and is up about 4 percent.

Farchy reports: “It has become a distressingly familiar question. With the price of agricultural staples such as corn, soybeans and wheat soaring for the third summer in five years, the prospect of another price shock is once again becoming a prominent concern for investors and politicians alike. The debate marks a dramatic shift from just a few weeks ago, when traders were expecting bumper crops and policy makers were comforting themselves that – if nothing else – falling commodity prices would offer some relief to the troubled global economy.”

On Tuesday, July 17 CBS Morning News reported that the drought and heat spell will dramatically impact 1,000 counties in 26 states. The story also stated that this year marks the worst drought since 1956.

Consumers have already seen price increases at the supermarket and at restaurants. Americans should expect prices to continue to soar.

*** Check back later for more updates to this business report. ***