ANZ Group Holdings Ltd head of agribusiness analytics, Michael Whitehead, said droughts, downpours and large-scale fires in areas from Asia to the Americas are raising concerns about crop losses, driving up global food prices.
Points of attention
- Extreme weather conditions such as droughts, rains, and fires are causing a sharp increase in global food prices due to crop losses.
- The rise in key food product prices like wheat, soybeans, and coffee is attributed to limited supply and increased demand.
- Weather-related challenges in various countries are complicating the situation, leading to further concerns about food product availability.
- Analysts emphasize the necessity of careful strategies by national and international economies to maintain food price stability amidst growing challenges.
- The impact of weather conditions on food prices extends globally, with regions like Australia, Brazil, and Southeast Asia facing significant production threats.
Global food prices are rising rapidly due to weather conditions
We've seen a combination of the worst weather conditions of late which has pushed prices up as uncertainty around supply means buyers are willing to pay more, says chief executive Michael Whitehead.
He pointed out that compared to the beginning of this year, the situation has somewhat worsened. After all, at the beginning of the year, food prices were restrained by healthy supply and reduced demand in key markets, including China.
According to Commonwealth Bank of Australia Assistant Director of Sustainable Development Economics and Agriculture Dennis Woznesenski, further price increases will lead to an increase in the price of food already in supermarkets.
Wheat futures in Chicago started to rise in September on fears that bad weather in key exporting countries could lead to a reduction in global stocks, which have already fallen to a nine-year low.
How weather conditions have led to a sharp increase in the price of key food products
Fields in Australia are threatened by drought and frost, and a lack of rain in the Black Sea region limits the amount of planted area for the 2025 crop.
A severe drought in Brazil led to the biggest rise in soybean futures in 2 years,
Fires have broken out in the country's sugarcane fields, sending the sweetener futures up about 16% this month.
Arabica prices reached their highest level since 2011 as bad weather disrupted the flowering process of coffee trees.
Due to the bad weather, the cheaper type of coffee — robusta — was also affected, as a result of which its prices rose to the level of arabica.
A long drought in Vietnam was replaced by heavy rains on the eve of the harvest.
And elsewhere in Southeast Asia, palm oil supplies are shrinking as trees age, sending futures to a five-month high.
Drought in much of northern and central Brazil is likely to continue to pose a threat to crops, JPMorgan Chase & Co analysts forecast.
Michael Whitehead also noted that traders are watching tensions in the Middle East and the Black Sea, as well as how the results of the upcoming US elections will affect relations with China.
