By Emma Rowley 22 Jul 2012
Scorching temperatures and extreme dryness are devastating harvests across farmland in the Midwest. More than three quarters of the US's growing space is now affected by the harsh weather conditions, according to official data.
With crops dying in the fields, the prospect of tightening supplies is driving what Barclays Capital analysts say is one of the most rapid prices spikes "in recent memory".
US corn and wheat futures contracts have both risen by a third since mid-June, the biggest four-week price gain in US grains futures seen more than a quarter of a century. On Thursday, US corn for September delivery set a record high of over $8.16 a bushel, while soybeans for August delivery also hit a record at $17.49.
Alan Clarke, an economist at Scotia Capital, expects the effects of the drought to add "significantly" to UK inflation over the start of 2013, since it takes around six months before rises in agricultural commodity prices feed into prices on the supermarket shelves.
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