July 23, 2012

World's July cereal grains exports up on worst US drought

As US crops face the worst drought in more than 50 years, export prices of cereal grains have risen sharply in July, with the exception of rice, the United Nation's Food and Agriculture Organisation said Friday (July 20).

Average export prices of corn jumped 20% in the first three weeks of July compared with their June levels to a new record high of US$322/tonne.

"Prices were underpinned by continuous concerns about the impact of hot and dry weather conditions on yield potential of the 2012 corn crop in parts of the US," FAO said in a statement.

International prices of wheat soared 21% in the same period to an average of US$347/tonne, but below record levels seen in March 2008.

"Deterioration of prospects for the 2012 wheat production in the Black Sea region due to dry and hot weather, particularly in the Russian Federation, and strong corn values have put upward pressure on wheat prices."

Corn and wheat are the main ingredients for the production of biofuels in the US and Europe, respectively. The US consumes around 40% of its corn crop in the production of fuel ethanol and its by-products, while Europe grinds around 4% of its wheat crop for the manufacturing of biofuels.