US drought crop damage worsens, ethanol waiver urged
WASHINGTON (REUTERS) - The worst United States (US) drought in more than 50 years has caused more damage than expected to corn and soybean crops, the US government said on Friday, heightening calls for a suspension of ethanol quotas to head off another global food crisis.
While benchmark corn and wheat futures closed lower in Chicago, experts say food prices appear set to keep rising after a 6 per cent jump last month, escalating a food-versus-fuel debate centred on a US law that dictates that about 40 per cent of the corn crop must be converted into ethanol.
Hours after the US Department of Agriculture (USDA) said the corn yield would likely fall to its lowest since 1995, worse than forecast, the governors of two poultry-producing states asked the Obama administration to waive the ethanol requirement, the first formal request for relief.
Pressure is also building internationally, as poorer countries bear a larger burden of rising food costs. The top United Nations food official, José Graziano da Silva, wrote in the Financial Times that an "immediate, temporary suspension" of the mandate could help head off another world food crisis.