US drought prompts inflation fears
The extreme hot weather in the US has hit corn and soybean yields, pushing up prices of the commodities and raising concerns at manufacturers - and prompting forecasts from Washington that retail prices could increase faster than usual in 2013.
Food commodity speculation is back in the spotlight as the prospect of another global food price surge looms and banks move to placate regulators.
The UN has produced data that confirms the impact the extreme weather in the US has had on global food prices. In the West, we face higher retail prices but poorer nations will be hardest hit.
US private-label food group Ralcorp Holdings has said it expects to see volume trends improve after recording a 6% decline in its third quarter.
Premier Foods plc CEO Michael Clarke has insisted the UK food manufacturer will pass on the higher wheat costs it expects to incur after extreme weather conditions in the US and the UK.
US meat giant Tyson Foods has expressed confidence it can push through the higher grain costs it expects to incur after the severe drought in the country.
Commodities giant Archer Daniels Midland has said it is continuing to increase its investment outside the US in light of the country's drought pushing corn prices up
The US meat industry has called for an easing of renewable fuel regulations to reduce the amount of corn ethanol in the country produced this year as processors face soaring feed costs.
US livestock and poultry producers have warned the severe drought in the country will have a "devastating" effect on the agricultural industry, food manufacturers and consumers.
The worst drought in the US for 50 years could push up food prices into 2013, government officials have said.
Prices of food and soft drinks in the UK increased at their slowest rate for two years in June, official figures said today (17 July). But beware: weather events on both sides of the Atlantic could accelerate inflation once more.
The US Department of Agriculture has lowered its forecast for domestic corn production, confirming market fears the country's worst drought in almost 25 years has hit yields.
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