Prices for corn, soybeans, and wheat – crops that are the foundation of much of the world’s diet – have reached levels not seen since 2013, fueled in part by speculators expecting prices to rise even more, some analysts say.
Wheat has passed its February 2013 high and closed 7 May at $7.73 a bushel at the Chicago Board of Trade before settling back to $7.61 on 10 May. Corn closed at $7.72 on 7 May and is up 142 percent in the past 12 months, Bloomberg reported.
Soybeans were at their priciest since June 2013 at $16.22 a bushel on 7 May.
Last week, Bloomberg’s Agriculture Spot Index tracking prices of basic crops jumped the furthest in more than eight years as prices for crop futures soared.
Food prices have been climbing relentlessly for ten months, Bloomberg noted.
Droughts in Brazil, Canada, France, and the central and western U.S. are withering corn and wheat crops, while too much rain in Argentina is damaging soy fields.
Meanwhile, China is rumored to be seeking a million tons of corn to import this year to continue expanding its hog herds as an increasingly affluent population demands more meat.
Bangladesh and Egypt also have made offers for grain in hopes of securing supplies before inventories disappear.
In addition, supply-chain bottlenecks, from shortages of shipping containers to a shortage of workers at trucking depots, have made a range of foods hard to get.
“We are getting close to the point of having to ration demand,” analyst Jacqueline Holland at Farm Futures told Bloomberg. “Farmers are either running out of crops to sell or waiting for the market to go even higher.”
Russia, a major wheat exporter, has curbed shipments to ensure adequate domestic supplies and has frozen prices at home, Bloomberg reported; Bolivia has banned beef exports to keep its citizens fed and curb price spikes.
The shortages and rising prices will translate to sticker shock at the supermarket over the summer, as we reported in the 4 May Trends Journal.
Already, tortilla prices in Mexico have soared, as has the cost of beef in Brazil, palm oil in Myanmar, and meats in the U.S.
It takes three to six months for price hikes in raw materials to appear on grocery shelves, insiders say. Nestlè, Procter & Gamble, and General Mills all have warned of higher prices for consumers in the summer and beyond.
TREND FORECAST: Food inflation will hit consumers hard, especially in poorer nations where people are forced to spend a greater portion of their incomes to eat.
This, in turn, will push more people onto the streets to protest declining living standards, rising prices, government corruption, crime, and violence. As tensions rise and economies falter in developing and poorer nations, more people will seek refuge in safe-haven nations, which will escalate anti-immigration and nationalist movements in the countries they wish to seek refuge in.
