January 5, 2021
Containers Freight prices have doubled from S E Asia to all world origin.
Port congestion and a lack of containers has caused shipping durations to double in some cases.
People are waiting also three to four months for their orders, adding further pressure on the market.
In this context, just for exemple, premium rice prices, are jumped after south-east Asian producers threatened to limit overseas sales at the start of the pandemic, and have remained elevated over logistics bottlenecks and buying by China.
In addiction, hedge funds and other speculators have also bought food commodities in the second half of 2020, further adding to the rally.
At the end of October, speculators held record net “long” positions in agricultural commodity futures and options after an unprecedented 22 consecutive weeks.
While some have taken profits, bullish positions remain at multiyear highs.
However, we must note, that although prices on the international markets are lower than levels seen in 2009 and 2010-12, food is expected to remain a pressure point, especially for less developed countries.
In fact, this sharp rebound in food prices is stirring concerns over inflation and potential unrest in some developing countries.
Stockpiling, logistical bottlenecks and dry weather are pushing wheat, soybeans, rice, and corn markets higher.
Soybeans, a key ingredient for livestock feed and an important source of vegetable oil, are trading higer $13 a bushel.
We remeber that in 2007-08, severe droughts droved up prices, triggering food riots in some African countries.
And more , a wheat export ban by Russia in 2010 also led to a surge in food prices in the Middle East, contributing to the Arab uprising.
So, as we can see, there are very similar conditions into this period.
And a “Covid shock”, could hitts particulary some of the more vulnerable countries.
So, the real impact is the access to food.
People have lost their income.
There are a lot of unhappy people and “this is a recipe for social unrest”, said , senior economist at the FAO.
The issue is not a food shortage at this point — grains and oilseeds have had bumper crops over the past few years, leading to higher inventories.
But analysts worry that higher prices at a time of economic stress like this bodes badly, especially for poorer countries.
“Food inflation is the last thing governments need right now,” said , analyst at Rabobank.
However, experts expects higher prices on agricultural commodities.
And various governments shoring up their food reserves, have pushed markets higher more.
China has been and continuin a particularly big buyer of everything from corn to rice and wheat.
A recovery in the hog herd after the devastation caused by African swine fever has meant a rebound in grains used for livestock feed.
In addiction, wheat purchases by North African countries have kept pace, and food companies are also making sure they do not end up with shortages.
Wheat itself was plentiful, but inventories are piling up in importing countries and supply worries are fuelling the grain bulls.
“It’s a transition from ‘just in time’ to ‘just in case’ ”.
“If [people] will realise the vaccine won’t solve the problems in the near term and they don’t have food, then things could get out of control,” warned the FAO .
THE REAL figures are :
WORLD STOCKS END YEAR ( MIO MT )
CEREALS WHEAT RICE
2011 595 204 146
2015 794 242 172
2017 880 287 176
2020 866 283 181
