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A recent declining trend in food prices could be threatened by droughts in the American breadbasket. David Uberti reports in The Wall Street Journal:

Food costs were finally starting to show signs of easing after the pandemic and Russia’s invasion of Ukraine sent prices skyrocketing. Now, a drought across America’s breadbasket is a threat to further relief.

The dry spell has spanned the wheat fields of the Great Plains and the Corn Belt in the Upper Midwest, leaving some areas with fractions of their normal rainfall as they head into crucial growing periods for corn and soybeans. The fear is a repeat of a drought-stricken 2012 that sent crop prices surging.

“The next three to four weeks are going to be huge,” said Angie Setzer, co-founder of Consus, which advises farmers on how to sell crops and minimize financial risk.

U.S. food inflation had eased in recent months as crop prices fell. Then in early June, fears of drought-stunted crops and abandoned fields started driving up prices for ingredients used in foods including dinner rolls, pizza dough and oatmeal. Scattered rainfall in recent days raised hopes that harvests in certain areas will be salvaged, moderating price bumps.

In Chicago trading, contracts for future deliveries of the soft red wheat widely used in baked goods are up more than 11% from the start of June. Oat prices climbed 8.5% over the same time. Soybean oil, used for frying and baking and low-carbon trucking fuel, surged 32%. Corn has edged about 4.5% lower, after recent rains reversed a steep rally earlier in June.

U.S. food inflation had eased in recent months as crop prices fell. Then in early June, fears of drought-stunted crops and abandoned fields started driving up prices for ingredients used in foods including dinner rolls, pizza dough and oatmeal. Scattered rainfall in recent days raised hopes that harvests in certain areas will be salvaged, moderating price bumps.

In Chicago trading, contracts for future deliveries of the soft red wheat widely used in baked goods are up more than 11% from the start of June. Oat prices climbed 8.5% over the same time. Soybean oil, used for frying and baking and low-carbon trucking fuel, surged 32%. Corn has edged about 4.5% lower, after recent rains reversed a steep rally earlier in June.

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