Having first expressed concern over the effects of drought in the United States, where record maize yields predicted at the beginning of the season have been irreversibly damaged by severe drought conditions, affecting the Midwest in particular, the UN Food and Agriculture Agency has issued a warning over the potential effects of a grain price rally fuelled by drought-inspired panic.

The FAO said at the beginning of the month that the US drought may precipitate a rise in food prices, and that the world’s poorest would be likely to suffer most as a result. However, the worsening drought has sparked a rapid grain price rally, causing maize prices to reach record highs yesterday.

Abdolreza Abbassian, a senior economist at the FAO, told new agency Reuters this morning, "We are concerned for two reasons: first the pace at which price rises are taking place and second because at least for the time being there seem to be no relief in prices, in particular for corn, soybeans and wheat."

The economist said that, although concern is rife as a result of adverse weather, which has affected numerous global regions this year, grain supplies are plentiful. In 2008, a similar food crisis is said to have sparked riots around the world, however rice and wheat reserves are much better stocked this year.

Abbassian said there is currently no shortage of rice, an important grain in terms of global food security, though a coarse grain shortage had been foreseen due to inclement weather in both North and South America this season.  

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