Crop prices capped their biggest monthly jump in more than a decade as wars and extreme weather disrupt supplies, raising concerns about food inflation.
The Bloomberg Agriculture Spot Index, which tracks 10 major products, rose more than 13% in August, the steepest gain since July 2012. Wheat has been one of the biggest drivers, with prices recently reaching a three-year high as Black Sea port attacks slash shipments from a major growing region. Sugar and cocoa were up more than 20% as a strengthening El Niño fuels weather worries.
While it can take time for pricier crops to feed through to supermarket shelves, the gains come on top of rising energy and transport bills driven by the war in Iran. That’s fueling worries about the cost of everyday pantry staples from bread to meat and dairy.
For wheat, grain exports from Ukraine and Russia have slowed as both sides strike each other’s ships and ports. Russia is also preparing to escalate attacks after concluding that negotiations for a peace deal have reached a dead end, Bloomberg reported last week.
“The Ukraine government is purchasing large supplies of silo bags, while Russia is looking at huge rail subsidies to reroute a modest portion of its grain exports to the Baltic, reflecting both countries’ expectation that the war on grain will persist,” AgResource Co. said in a note.
Together, the two nations account for more than a quarter of the world’s wheat exports, as well as large amounts of barley, corn and sunflower oil. That’s leaving few obvious options to fill the gap, Lachstock Consulting said in a Monday note. Unsold grain is piling up, and Ukraine’s agriculture ministry expects farmers to plant less winter wheat for the 2027 season.
