From Bloomberg Opinion, August 13:
A Break in the Weather: Good News From the World’s Farms
The headlines suggest catastrophe for the global food supply: Biblical heatwaves, floods, storms and wildfires. And yet, in the world’s breadbaskets, the weather has been fair this growing season — so good that we’re facing an oversupply of key agricultural commodities and thus much lower prices than in 2022 and 2023.
If the favorable weather persists for a couple more months, the low farm prices we enjoyed from 2015 to 2020 are on the cusp of a return. In a world still unconvinced that inflation has been slain, the drop in wholesale food prices means there’s one less thing for central bankers to worry about as they ease monetary policy.
Let me emphasize the word “wholesale” — what you and I pay depends upon numerous other costs — and on whether manufacturers and retailers pass on the savings or expand their profit margins.The fine weather stretches from the US Midwest to the plains of Kazakhstan; from the Brazilian savannah to the Australian grasslands. Even in my home country of Spain, so important for olive-oil production, the growing season has been about right.
The market is frontrunning the expected bumper harvests. The cost of wheat, corn and soybeans has already fallen to a four-year low, down about 50% from the all-time high set in 2022 after the Russian invasion of Ukraine. Rice prices are lagging, but those costs are about to hit a one-year low. Olive-oil prices, closely tracked in my kitchen, are down 25% from their record high set in January, and probably have further to fall.
Of course, there are exceptions: Coffee prices remain sky high, while the costs of cocoa and some vegetables remain high by historical standards. At supermarkets and restaurants, prices are also higher than before, but that has a lot to do with energy costs and wages, rather than food inputs.
To be sure, it’s hot – too hot: July marked the 14th-consecutive month of record-high temperatures for the planet, according to the US National Oceanic and Atmospheric Administration. But that doesn’t mean catastrophe for the world’s breadbaskets.
The weather isn’t the only reason why the world is heading toward lower food prices. The last two decades have seen huge improvements in agronomics. Seeds yield far more than before, even when rain and temperatures aren’t ideal, and irrigation has expanded. Farmers have access to much better hardware: large planters, powerful tractors, improved combines, larger storage facilities.....
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Related:Farm Country: "Cargill’s annual revenue falls for the first time in years"
