Singapore: High food prices in recent years have prompted farmers worldwide to plant more cereals and oilseeds, but consumers are set to face tighter supplies well into 2024, amid adverse El Nino weather, export restrictions and higher biofuel mandates. Global wheat, corn and soybean prices – after several years of strong gains – are headed for losses in 2023 on easing Black Sea bottlenecks and fears of a global recession, although prices remain vulnerable to supply shocks and food inflation in the New Year, analysts and traders said.
Ole Houe, director of advisory services at agriculture brokerage IKON Commodities in Sydney, said,
The supply picture for grains certainly improved in 2023 with bigger crops in some of the key places which matter. But we are not really out of the woods yet.
“We have El Nino weather forecast until at least April-May, Brazil is almost certainly going to produce less corn, and China is surprising the market by buying larger volumes of wheat and corn form the international market.”
Also Read: What Is Climate Smart Agriculture: Is This The Key To Ensure Food Security Amid Climate Change?
El Nino & Food Production
The El Nino weather phenomenon, which brought dryness to large parts of Asia this year, is forecast to continue in the first half of 2024, putting at risk supplies of rice, wheat, palm oil and other farm products in some of the world’s top agricultural exporters and importers.
Traders and officials expect Asian rice production in the first half of 2024 to drop as dry planting conditions and shrinking reservoirs are likely to cut yields.
World rice supplies tightened this year already after the El Nino weather phenomenon cut into production, prompting India, by far the world’s biggest exporter, to restrict shipments.
While other grains markets were losing value, rice prices rallied to their highest in 15 years in 2023, with quotations in some Asian export hubs gaining 40%-45%.
India’s next wheat crop is also being threatened by lack of moisture, which could force the world’s second-largest wheat consumer to seek imports for the first time in six years as domestic inventories at state warehouses have dropped to their lowest in seven years.
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Farmers Down Under
Come April, farmers in Australia, the world’s No. 2 wheat exporter, could be planting their crop in dry soils, after months of intense heat curbed yields for this year’s crop and ended a three-dream run of record harvests.
This is likely to prompt buyers, including China and Indonesia, to seek larger volumes of wheat from other exporters in North America, Europe and the Black Sea region.
“The (wheat) supply situation in the current 2023/24 crop year is likely to deteriorate compared to last season,” Commerzbank wrote in a note.
“This is because exports from important producer countries are likely to be significantly lower.”
On the bright side for grain supplies, South American corn, wheat and soybean production is expected to improve in 2024, although erratic weather in Brazil is leaving some doubt.
Also Read: COP28 Special: How To Make Agriculture Sustainable And Water Positive Amid Climate Change?
In Argentina, abundant rainfall over farming heartlands is likely to boost production of soybeans, corn and wheat in one of the world’s largest grain exporting nations.
According to Argentina’s Rosario grains exchange (BCR), 95% of early planted corn and 75% of soybeans are in “excellent to very good” conditions, thanks to rains since the end of October across the country’s Pampas region.
Brazil is set for near-record farm output in 2024, although the country’s soybean and corn production estimates have been reduced in recent weeks due to dry weather.
Global palm oil production is also likely to fall next year due to dry El Nino weather, supporting cooking oil prices that dropped more than 10% in 2023. The decline in output comes amid expectations of higher demand for making palm oil-based biodiesel and cooking oil.
“We see more upside price risk than down,” said CoBank, a leading lender to the U.S. agriculture sector.
Global grain and oilseed stock inventories are tight by historic measures, the northern hemisphere will likely have a strong El Nino weather pattern during the growing season for the first time since 2015, the dollar should continue its recent decline, and global demand should return to its long-term growth trend.
Also Read: What Are The Learnings From 2023, The Year India Saw Extreme Weather Events
(This story has not been edited by NDTV staff and is published from a syndicated feed.)
NDTV – Dettol have been working towards a clean and healthy India since 2014 via the Banega Swachh India initiative, which in its Season 10 is helmed by Campaign Ambassador Ayushmann Khurrana. The campaign aims to highlight the inter-dependency of humans and the environment, and of humans on one another with the focus on One Health, One Planet, One Future – Leaving No One Behind. It stresses on the need to take care of, and consider, everyone’s health in India – especially vulnerable communities – the LGBTQ population, indigenous people, India’s different tribes, ethnic and linguistic minorities, people with disabilities, migrants, geographically remote populations, gender and sexual minorities. In a world post COVID-19 pandemic, the need for WASH (Water, Sanitation and Hygiene) is reaffirmed as handwashing is one of the ways to prevent Coronavirus infection and other diseases. The campaign will continue to raise awareness on the same along with focussing on the importance of nutrition and healthcare for women and children, fight malnutrition, mental well-being, self-care, science and health, adolescent health & gender awareness. Along with the health of people, the campaign has realised the need to also take care of the health of the eco-system. Our environment is fragile due to human activity, which is not only over-exploiting available resources, but also generating immense pollution as a result of using and extracting those resources. The imbalance has also led to immense biodiversity loss that has caused one of the biggest threats to human survival – climate change. It has now been described as a “code red for humanity.” The campaign will continue to cover issues like air pollution, waste management, plastic ban, manual scavenging and sanitation workers and menstrual hygiene. Banega Swasth India will also be taking forward the dream of Swasth Bharat, the campaign feels that only a Swachh or clean India where toilets are used and open defecation free (ODF) status achieved as part of the Swachh Bharat Abhiyan launched by Prime Minister Narendra Modi in 2014, can eradicate diseases like diahorrea and the country can become a Swasth or healthy India.
