War in Ukraine, heat waves, Covid, the cocktail is prepared to witness a global crisis
(Boursier.com) – “All we are missing is a heatwave in Europe and the cocktail will be perfect to witness a historic global food crisis” … This note from a commodity trader fuels discussions About possible food shortages looming. In the markets, wheat prices hit high levels on Monday after India announced a ban on its exports, while Russia’s military invasion of Ukraine threatens future crops. “The Indian ban is justified by the heat wave which should reduce national production. However, some countries were dependent on Delhi To compensate for the decline in Ukrainian wheat production“.
50 degrees in the shade
Temperatures have reached 50 degrees in some Indian regions in recent weeks, while in Europe, forecasters are sounding the alarm: In France and the United States, several major production regions are already experiencing drought, jeopardizing production forecasts accordingly. For some experts, The beginning of the season is similar to the one that was in 1976. The week that has just begun could see the thermometer soar to 35 degrees in much of southern France…
The Chicago Board of Trade’s most-traded wheat futures contract early in the day gained as much as 70 cents, the largest allowable one-session gain, to $12.50 a bushel, its highest level ever since March 9. Euronext September contract, a European market benchmark, which came close to the record last week, gained 4% to €433.25 per tonne, not far from the historic record of €450 set in early March.
“no shock absorbers”
For its part, the US Department of Agriculture announced last week that global stocks will fall during 2022-2023 to their lowest level in six years…”There are new factors that are very worryingLondon-based analyst comments: China’s COVID-19 outbreak struggles to contract, while North Korea confirmed the first outbreak of infection, declaring the “most serious national emergency” and imposing widespread confinement.
There is, too, The outbreak comes as the country intensifies its fight against droughtKim Jong-un warned of an “extremely tense” food situation.
“In North Korea, economic activity requires a lot of people movement, and we shouldn’t expect much trade or help from China,” said Lim Yeol-chul, a professor of North Korean studies at Kyungnam University in South Korea. “Agricultural activity can be reduced and it will be difficult to distribute fertilizers, raw materials and equipment,” he said.
Countries “at risk”
In Ukraine, the yield of the upcoming wheat crop is supposed to be significantly reduced compared to 2021. The country will be able to produce 21 million tons of wheat in the current year, which is 12 million tons less than in 2021. In general, it will be between 20 30% and 30% of winter fields of grain, corn and sunflowers will not be planted or harvested in Ukraine in the 2022-23 season, while Russian exports are still expected to be severely disrupted by international sanctions.
While Moscow maintains its blockade of Ukrainian ports, Trading is very difficult… The countries most at risk due to their heavy dependence on food are Egypt, Somalia and the Democratic Republic of the Congo. “We are committed to working together to ensure that there is enough food for all, including the poorest, most vulnerable and displaced people,” the 51-member organization declared. Trade in a recent press release, and also promised to keep food markets open…
Global food prices may post increases of 8% to 20% in the wake of the war in UkraineThe Food and Agriculture Organization of the United Nations (FAO), which warns of foreseeable progress in Malnutrition on a global scale. Remember that Russia is the world’s largest wheat exporter and Ukraine ranks fifth: the two countries together provide more than a third of world grain exports (19% for barley, 14% for wheat and 4% for corn). “Potential disruptions to the agricultural activities of these two major commodity sources could seriously exacerbate global food insecurity,” FAO Director-General Qu Dongyu warned last month.
In its initial assessment of the impact of the Russian invasion of Ukraine, the FAO highlighted the uncertainties surrounding Ukraine’s crops, as well as Russia’s agricultural exports, not to mention that Russia is also a major exporter of fertilizer products…
Disaster on the horizon?
Also, according to the FAO, 50 countries, many of which are among the world’s poorest, depend on Russia and Ukraine for no more than 30% of their wheat supply, and will therefore be particularly vulnerable to the ongoing crisis…” 8 to 13 may suffer An additional million people will be undernourished worldwide in 2022/23”, warns the Food and Agriculture Organization, noting that the evolution of malnutrition will be particularly noticeable in the regions of Asia-Pacific and Sub-Saharan Africa…