On the same day the World Food Programme was awarded the Nobel Peace Prize for its fight against hunger, fresh numbers from the U.S. government showed that tighter crop supplies could worsen the food-inequality crisis that’s sweeping the globe.
In its hotly watched monthly crop report, the U.S. Department of Agriculture on Friday said world soybean stockpiles will be smaller than expected, signaled growing competition over global wheat shipments and highlighted dry weather as a threat to crops in parts of South America and Europe.
Taken together, the report indicated that global food prices could keep climbing, making adequate nutrition more expensive as millions are thrown out of work and economic woes deepen.
Just this week, the United Nations released its gauge of global food prices, which showed costs rose 2.1% in September, mainly driven by grains and vegetable oils. The index is approaching a multi-year peak set in January. The USDA figures show that the increases could continue as China imports more soybeans and wheat, tightening the global balance sheet.
Prices are rising as the world is forecast for a sharp rise in food insecurity because of COVID-19’s impact. As many as 132 million more people globally may fall into the grip of hunger this year, including in many places that used to have relative stability.
While global grain and oilseed supplies remain relatively robust, wild weather including a recent severe wind storm in Iowa means harvests are smaller than initially hoped. Average yields for U.S. corn and soybeans are still record large, though there are fewer acres that will be harvested.
Meanwhile, in top wheat-exporter Russia, production was raised by 5 million metric tons to 83 million tons, the second-biggest ever, according to the USDA’s report. Wheat output was cut in Argentina, Canada, Ukraine and the U.S.
Prices have been surging in Chicago, with investors enticed by a demand-driven rally. Soybeans for November delivery climbed as much as 2.8% to $10.7975 a bushel Friday, the highest for a most-active contract since March 2018. Wheat prices touched a five-year high earlier this week.
“When the rubber meets the road, the only thing the world buyer is interested in is price,” Charlie Sernatinger, head of global grains at ED&F Man Capital Markets Inc. in Chicago, said in an email.
The crop outlooks and higher prices come as the World Food Programme warned of “hunger crisis of inconceivable proportions,” unless it and other groups with a similar focus get the financial backing they need to do their work.