Crop Prices Hit Three-Year High as Heat, War Stoke Supply Fears

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Or sign-in if you have an account.4ge3k66(u4a932[otyk)x{g}_media_dl_1.png Bloomberg(Bloomberg) — Crop prices rose to a three-year high as heat waves and escalating attacks in the Black Sea threaten to disrupt global grain trade, reviving risks to food inflation that have also been stoked by the war in Iran. THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe Bloomberg Agriculture Spot Index, which tracks 10 major crop products, reached the highest since July 2023 on Wednesday, following a seven-week advance. Prices had earlier peaked in May on crop worries from strained fertilizer and fuel flows from the Strait of Hormuz, before the risk premium faded the next month. Now, crops are rising anew as fresh war and weather risks emerge. Energy markets have rallied as the Middle East conflict escalates and Europe’s grain harvests are being hit by blistering heat. Meanwhile, wheat prices are climbing as intensified attacks by Russia and Ukraine on each other’s export corridors curb trade.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againIf the rally persists, it could ripple through the food supply chain, lifting costs for staples from bread and cooking oil to meat and dairy. Although large stockpiles remain for many major grains after bumper harvests in recent years, the return of the El Niño weather phenomenon has also added to concerns about smaller crops, with futures for coffee and cocoa rising in July.“What really drives the market is whether there is physical supply coming to those who need it,” said Dennis Voznesenski, agricultural economist at Commonwealth Bank of Australia. While factors such as heat and the tensions in the Middle East have been building for weeks, the Black Sea conflict was “the straw that broke the camel’s back,” he said. Chicago wheat futures hit a fresh two-year high on Thursday, after surging more than 4% in the prior session. Mounting strikes between Russia and Ukraine on ports and ships are curbing trade from a region that accounts for more than a quarter of global wheat exports.A vessel carrying barley for crop trader Archer-Daniels-Midland Co. was hit earlier this week at Ukraine’s port of Odesa, while Russia has banned vessels from anchoring at the Sea of Azov and Kavkaz ports in areas that lack organized air defense systems. The escalation is threatening to choke off supply from the region, said Vitor Pistoia, senior grains and oilseeds analyst at Rabobank.In addition, the renewed conflict between the US and Iran has pushed crude oil prices to their highest in weeks, increasing demand for biofuel feedstocks such as corn and vegetable oil. Chicago soybean futures hit a two-year high on Thursday, with palm oil futures in Kuala Lumpur rallying as much as 2.1%. The tropical oil recently reverted to a discount to gas oil, boosting its appeal in fuel production. Elsewhere, scorching temperatures across Europe are adding to concerns over crop losses, particularly for corn. France, the European Union’s biggest agricultural producer, has endured three heat waves since late May, with record-breaking temperatures stressing the major grain during a key stage of development.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.Taken together, that’s “lifting all boats” for crop prices, Pistoia said. US corn and soybean fields have also been tested by a spell of hot, dry weather. One options trader made a $20 million bet on Wednesday that corn would rally to as much as $6 a bushel, more than $1 above current levels. While soybean ratings recently improved, a pickup in sales to China has also supported demand.For softs, the return of El Niño has also sent arabica coffee and cocoa prices climbing, with both commodities headed for monthly gains in New York. The weather phenomenon can bring unusually hot and dry conditions to West Africa, a vital cocoa-growing region.—With assistance from Kanupriya Kapoor.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.