Temperatures into the 90s are threatening corn and soybean crops in southern Brazil and Uruguay where state-of-emergency has been declared in the north of the country. With the high temperatures, forecasters are lowering harvest forecasts. This is helping propel crop prices to two-year highs and fueling concerns about tight global supplies.
In Argentina, dry weather caused by the La Niña weather pattern already is damaging fields. Argentina is projected to be the world's second-largest corn exporter and third-largest soybean exporter this year. Weather forecasters see more heat and little rain on the immediate horizon. That could limit production further as recently planted corn and soybeans have reached key stages of development with only one-quarter of the amount of rainfall they normally need in some regions.
Prices of corn, soybean and wheat crops remain well below 2008 peaks. But analysts figure prices for some crops could rise further as the extent of any lost production becomes clear. The result could be higher consumer prices at grocery stores. The rise in food prices could pose a threat to global growth if fast-growing nations try to slow their economies to contain food inflation.
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