In its hotly watched monthly crop report, the US Department of Agriculture (USDA) said world soybean stockpiles will be smaller than expected, signaled growing competition over global wheat shipments and highlighted dry weather as a threat to crops in parts of South America and Europe.
Taken together, the report indicated that global food prices could keep climbing, making adequate nutrition more expensive as millions are thrown out of work and economic woes deepen.
United Nations also released its gauge of global food prices, which showed costs rose 2.1% in September, mainly driven by grains and vegetable oils. The index is approaching a multi-year peak set in January. The USDA figures show that the increases could continue as China imports more soybeans and wheat, tightening the global balance sheet.
Prices are rising as the world is forecast for a sharp rise in food insecurity because of COVID-19 impact. As many as 132 million more people globally may fall into the grip of hunger this year, including in many places that used to have relative stability.
While global grain and oilseed supplies remain relatively robust, wild weather including a recent severe wind storm in Iowa means harvests are smaller than initially hoped. Average yields for US corn and soybeans are still record large, though there are fewer acres that will be harvested.
Meanwhile, in Russia, top wheat exporting country production increased by 5 million tons to 83 million tons, the second biggest ever, according to the USDA’s report. Wheat output was cut in Argentina, Canada, Ukraine and the United States.
Prices have been surging in Chicago, with investors enticed by a demand driven rally. Soybeans for November delivery climbed as much as 2.8% to US$10.7975 a bushel, the highest for a most-active contract since March 2018. Wheat prices touched a five-year high earlier this week.
The crop outlooks and higher prices come as the World Food Program warned of hunger crisis of inconceivable proportions, unless it and other groups with a similar focus get the financial backing they need to do their work.
