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U.S. drought push up global food prices

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The drought in the U.S., the worst in 50 years, has slashed crop productions and livestocks since June. More than 60 percent of the continental U.S. is suffering moderate to exceptional drought.

Over 50-percent of the quality of this year's corn harvest is poor or very poor and over a third of soybeans are getting similar ratings. The vast damage has been weighing on commodity prices too, pushing corn and soybean prices to record highs. Laura Luo takes a look at the impact the U.S. drought has had on food costs.

On Wednesday, CBOT corn December prices retreated from the 800 mark, and fell sharply to 7.78 U.S. dollars per bushel. Prices had hit a record of above 8.20 US dollars on July 31st. Soybean for November delivery also fell sharply. Experts say this will get passed on to food prices.

Chris Hurt, Agricultural economist, Purdue university: “Most of these losses at the production center will eventually be passed on in the form of higher food prices, food inflation is not only going to be in the United States, it's going to be literally worldwide.”

According to World Bank statistics, soybean prices have surged by a third since early June; corn prices rose 45 percent, and wheat prices have doubled. Last week, the Midwest has seen a few showers which eased the stress on some farms. USDA's chief economist says commodity prices are unlikely to go any higher from here.

Dr. Joseph W. Glauber, Chief economist, U.S. Dep't of agriculture: "It's unlikely to go any higher than that."

Some agricultural meteorologists say weather conditions are going to be wetter in the U.S Midwest this week, which will help the late planted soybean crop, but will arrive too late for the drought-stressed corn crop. However, there is no immediate concern about global food supply, as Mr Glauber reassures the drought will not cause a global food crisis.

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