While global wheat inventories are forecast by the USDA to contract 7.5 percent next year, more than any other major crop, they would still be 42 percent larger than in 2008. Droughts, freezes and floods that year damaged crops from Australia to Argentina to the U.S., driving the grain to a record $13.495 in Chicago. Global food prices measured by the UN are still 10 percent below the record reached in February 2011.

Declining Demand

Given this year's gains and increased speculation, investors should pare bets on higher prices, Barclays Plc said in a report Aug. 3. Improving weather, declining demand or an easing of U.S. requirements for ethanol in gasoline may send prices lower, London-based analysts Kevin Norrish and Sudakshina Unnikrishnan wrote in the report. The bank remains "modestly overweight" in grains and soybeans.

Goldman said Aug. 2 that corn will reach $9 in three months. The New York-based bank also said soybeans may rise to $20 in three months, topping the all-time high of $16.915 set July 23, and wheat may jump to $9.80.

Costlier grain means global food prices will jump 25 percent this year, Danske Bank A/S said July 16. The UN estimates imports of everything from fruit and vegetables to dairy products and cereal will top $1 trillion for a third consecutive year, with a 13 percent gain for meat as higher feed costs spur farmers to reduce herds.

Kenya Food

The impact won't be shared equally, with U.S. households spending 6 percent of their total expenditures on food, compared with 35 percent in India and 45 percent in Kenya, data from the Gates Foundation show. The U.S., with less than 5 percent of the world population, consumes 31 percent of global corn production, 18 percent of soybeans, 32 percent of cheese and 20 percent of beef and veal, according to USDA data.

Nations reliant on food imports, including Egypt, Pakistan, Bangladesh and Sudan, are especially vulnerable to unrest, according to a May 10 report by the National Intelligence Council, an adviser to the U.S. government. More than 60 food riots erupted worldwide from 2007 to 2009 as prices surged, the U.S. State Department estimates. Production will need to expand 70 percent by 2050 as 2 billion people are added to the population, according to the UN.

Retail-food costs will rise as much as 4 percent next year, the USDA said July 25. That will add pressure to consumers and Obama's election bid in November, said Tim Hagle, a political science professor at the University of Iowa in Iowa City.

"It keeps the economy in sort of a fragile position," he said. "That's the big issue for this particular election."

Insured Crops