Before we dive into the crop display, Europe’s centuries-old “hunger stones” were recently revealed in the Elbe River, which runs from the mountains of the Czech Republic through Germany to the North Sea. The stones date from a drought in 1616 and read: “Wenn du mich siehst, dann weine”. This translates to “if you see me, then cry.”
The warning on the rocks seems correct because the new crop report predicts that corn yields will fall 16% below the five-year average. That compares with a July forecast of an 8% drop.
The plunge in corn production could lead to further food inflation. It will increase the cost of feed for livestock herds, adding even more woes to farmers who are plagued by higher diesel and fertilizer prices.
“Periods of water and heat stress partially coincided with the sensitive stage of flowering and grain filling,” according to the crop monitoring report. “This resulted in the irreversible loss of performance potential.”
At the end of August, about half of Europe is under a drought warning. Crops, power plants, industry and fish populations have been devastated by the heat and lack of rainfall. The European Commission’s Joint Research Center warned earlier this month that the ongoing drought is the worst in 500 years as vast amounts of farmland turn to dust.
Heading into autumn, western and central Europe face a very high risk of dry conditions over the next three months which could lead to water shortages.
Increasing crop failure due to drought will only worsen the food crisis due to the unrest in Ukraine. EU supermarket prices for meat rose 12% in July compared to a year earlier. Milk, cheese and eggs are also skyrocketing at record rates.
This leaves us with the idea that inflation in Europe will remain sticky, as Germany’s central bank chief Joachim Nagel explained: “The inflation issue will not go away in 2023.”
From Zerohedge.com
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