Prices of essential foodstuffs, including wheat, corn and soybeans, are at their highest level since 2013, fueling concerns over food price inflation.
A resumption of harvests in the United States threatens to make essential groceries considerably more expensive, and the costs could soon spill over to grocery store shelves.
Wheat, corn and soybeans, the backbone of much of the world’s diet, all hit their highest level since 2013 after last week’s gains warned some analysts that a speculative bubble was forming.
One of the main culprits is bad weather for crops in the main producing countries. Drought in the United States, Canada and France is hurting wheat plants, as well as corn in Brazil. Rain in Argentina derails the soybean crop. Add to that the drought fears coming to America’s agricultural belt this summer.
Meanwhile, China is gobbling up global grain supplies, on track to absorb its largest volume of corn imports as it expands its massive pig herd. Rumors are circulating that the Asian nation is working on 1 million metric tonnes of new corn purchases, according to Arlan Suderman, chief commodities economist at StoneX.
“The agriculture business looks very attractive right now and the money is driving it,” Suderman said.
The farm rally is stoking fears of food inflation as staple crops heavily influence consumer prices for everything from bread and pizza dough to meat and even sodas. The Bloomberg Agriculture Spot Index – which tracks major agricultural commodities – climbed the most in nearly nine years last week.
The higher prices are also helping to generate even larger gains throughout the commodity complex, with metals such as palladium and copper rallying on a return to industrial operations across the globe.
Wheat climbed 4.7% to $ 7.46 a bushel, the most expensive since February 2013. Fresh buyers are starting to step in, Egypt and Bangladesh are issuing new tenders.
Corn rose from the 25-cent trade limit to $ 6.575 a bushel, the highest since May 20, 2013. Soybeans rose 1.9% to $ 15.44 a bushel, the highest since June 5, 2013.
Soybean oil has traded at levels not seen in a decade. A predicted increase in canola acreage in Canada will not be enough to reduce tight stocks, according to the Farmers Business Network. The United States will update planting progress and crop status figures later Monday in Washington.
The bullish momentum of investors has yet to abate. Net long bets on soybeans rose the most since September in the week of April 20, and money managers took a positive stance on wheat.
Yet Chicago soybean, wheat, and corn futures are all trading in overbought territory with their 14-day relative strength indices above 70, indicating that prices may have risen too far. , too fast. Values fell in China, signaling a possible easing of shortage fears as summer plantings progress and large purchases of foreign supplies continue to arrive at ports.