Global agricultural commodity prices post biggest rise since 2022

Global prices for major agricultural commodities rose at their fastest pace since early 2022 in the third quarter. The Bloomberg Agriculture Spot Index, which tracks 10 key commodities ranging from soybeans to coffee, gained 13% in July-September and more than 20% over the past year.

One of the main drivers has been disruptions to grain and oilseed supplies from the Black Sea region. Restrictions on Black Sea exports are forcing importers in Asia and Africa to seek alternative suppliers, while the rerouting of Russian grain through other ports is so far offsetting only a small share of traditional volumes.

Adverse weather is adding further pressure. Heat and drought have worsened the outlook for wheat and corn crops in the US and Europe, while a strengthening El Niño threatens palm oil, cocoa and other crops. India has also recorded its weakest monsoon season in a decade, increasing risks to agricultural output.

Chicago corn and wheat futures rose by around 15% during the third quarter, while soybeans gained 13%. Chinese purchases of US soybeans and shifts in trade flows between the US and China also provided support to the market.

Higher agricultural commodity prices could gradually feed through into more expensive food, particularly as elevated energy prices increase production costs. This is adding to global inflation risks, although ample US grain stocks are still partially limiting further gains in agricultural markets.

Tags: agricultural products, global market, weather conditions, corn, prices, wheat, drought