Warning US corn prices to rise sharply

The US Department of Agriculture (USDA) has slashed its forecasts for corn production and predicted sharp price rises, warning a drought and heatwave have destroyed much of the country's crop.

It estimates this year's corn yield - the amount produced per acre - will be the lowest since 1995-96 for the world's biggest producer of corn, soybeans and wheat. As a result of the shortfall, farm prices for corn will average $7.50-$8.90 per bushel, down from the $5.40-$6.40 predicted in July. The UN's Food and Agriculture Organization (FAO) has now called on the US to suspend its production of biofuel ethanol. Under US law, 40% of the corn harvest must be used to make biofuel; a quota the UN says could contribute to a global food crisis.