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Bad weather and war are threatening to keep the world’s wheat supplies under strain and reviving the specter of rising food costs.
From soggy fields in western Europe to parched soil in Australia and the war in Ukraine holding back supplies, farmers face setbacks.
That means global stockpiles will remain the smallest in almost a decade, according to analysts surveyed ahead of the US government’s first forecast for next season.
Bumper Black Sea harvests have long kept a lid on prices and wheat is trading at half its record set in 2022, but supply concerns are mounting again. Futures have rebounded to hit the highest since August and funds are trimming bearish bets that they’ve held for almost two years.
That’s a worrying sign for consumers who’ve finally found relief from rising food prices. Any prolonged rally could increase costs for bread and pasta and rekindle inflationary pressure on central banks — with other major crops like cocoa and coffee also climbing this year.
“Demand has increased, stocks remain tight globally and new crop issues are escalating,” said James Bolesworth, managing director at CRM AgriCommodities.
With Northern Hemisphere harvests approaching, the next few weeks remain critical for crop development, so there’s still time for things to improve — or worsen. Here’s a roundup of conditions in major growers:
Top exporter, Russia risks missing out on crucial moisture, with weeks of heat and not enough rain in the country’s south prompting analysts to cut harvest estimates. Half Russia’s winter wheat will remain too dry over the next two weeks, Commodity Weather Group said Wednesday.
Russia should still reap a big crop, but its dominance means that any jolts to local prices feed through to other markets — and the country’s wheat has been getting more expensive lately. -Bloomberg
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Bongani Ndlovu