Drought is shrinking crops from the U.S. Farm Belt to China’s Yangtze River basin, ratcheting up fears of global hunger and weighing on the outlook for inflation.
The latest warning flare comes out of the American Midwest, where some corn is so parched that stalks are missing ears of grain and soybean pods are fewer and smaller than usual. The dismal report from the Pro Farmer Crop Tour has helped lift a gauge of grain prices back to the highest level since June.
The world is desperate to replenish grain reserves diminished by trade disruptions in the Black Sea and unfavorable weather in some of the largest growing regions. But an industry tour of U.S. fields over the past week stunned market participants — who had been more optimistic — with reports of extensive crop damage due to brutal heat and a lack of water.