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Grain prices surge as US drought worsens

WASHINGTON — Oppressive heat and a worsening drought in the Midwest pushed grain prices near or past records yesterday as crops wilted, cities baked and concerns grew about food and fuel price inflation in the world’s top food exporter.

Soybean prices at the Chicago Board of Trade set a record high and corn closed near a record as millions of acres of crops seared in triple-digit heat in the Corn Belt. Corn fields have been plowed up in many locations for lack of rain. Now soybeans, which develop later than corn, are in the bull’s eye.

“I get on my knees everyday and I’m saying an extra prayer right now,” Agriculture Secretary Tom Vilsack told reporters after briefing President Barack Obama. “If I had a rain prayer or a rain dance I could do, I would do it.”

Vilsack said the drought was getting worse for hard-hit farmers and the wilting crops will mean higher food prices.

“Part of the problem we’re facing is that weather conditions were so good at the beginning of the season that farmers got in the field early, and as a result this drought comes at a very difficult and painful time in their ability to have their crops have good yield,” Vilsack said.

Drought conditions now extend over more than 60 per cent of the lower 48 states, the government said. The Department of Agriculture on Wednesday extended drought aid to an additional 39 counties designated as primary natural disaster areas, bringing such aid to a total of 1,297 counties across 29 states.

Vilsack said rising grain prices would mean meat and poultry prices will be higher this year and next, although the inflation may be delayed as farmers start culling their herds due to high feed prices and meat supplies stay adequate.

But the outlook for higher food prices could add up to another headache for Obama as he faces a November election with high joblessness and slower economic growth.

Hard-hit livestock producers and other groups want the Environmental Protection Agency to give oil refiners a waiver from the mandate to blend ethanol into gasoline, arguing demand for the corn-based fuel was driving up corn prices. About 40 per cent of the US corn crop now is used to produce ethanol. (Reuters)

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