18th August 2009

"Hope sustains the farmer," says the Latin proverb. So far this year, hopes of a bumper harvest have sustained investors worried about an inflation-inducing surge in food prices. The fear is that the torrent of fiscal stimuli flooding into the world economy will result in too much cash chasing too few grains, causing higher prices that stunt recovery. Yet while a global shortage has pushed sugar prices to their highest level in three decades, prices of soyabeans and corn have languished due to near-perfect summer growing conditions in the US Midwest. The US Department of Agriculture forecast last week the biggest-ever soyabean haul, a near-record corn crop and the lowest farm-gate prices for both grains in three years.