The world is closing towards a massive food crisis amid inflated food prices, yet there are signs that a key food producer, the US will keep most of its wheat production with itself. Reportedly, the US will ship the smallest amount of wheat in 50 years.
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The United States Department of Agriculture, in its monthly supply-and-demand report, stated that American wheat is comparatively expensive and the sales have been mediocre. Limited harvests are a result of adverse weather conditions across parts of the US breadbasket and scant water levels along the Mississippi River. All of this is making it slower and more expensive to get crops to export terminals.
This points towards less availability of the crop in global markets, which are depending on affordable grains in order to make up for the disruptions in the supply chain caused by the Russia-Ukraine crisis that directly hurt shipments from the Black Sea Region. To add to that, Canada, which is also a major Wheat Exporter is facing a shortage of rail cars to carry out shipments.
US wheat shipments were lowered by 50 million bushels to 775 million, the lowest since 1971. While ending stocks of grain were higher than expected, they’ll still be at the lowest since 2007. Benchmark futures in Chicago fell 2.1% to settle at $8.8225 following the report. Wheat Is Piling Up in the US Even as World Food Crisis Alarm Blares
Wheat is in focus because global food prices have touched records in recent months as inflation ripples through economies and hunger levels rise.
The Food Crisis
2022 is a year of sky-high food prices and food shortages in different parts of the world. The compounding crisis in distinct parts of the world was caused by compounding geopolitical and economic crises.
Following the 2022 Russian invasion of Ukraine, the Food and Agriculture Organization, as well as other observers of the food commodities markets, warned of a collapse in food supply and price increases.
Much of the concerns are related to supply shortages of key commodity crops, such as wheat, corn, and oil seeds, which could cause price increases. The invasion also led to an increase in the prices of fuel and associated fertilizers, causing further food shortfalls and price rises.
Even before the Russian invasion of Ukraine began, food prices were already at record highs. As of February 2022, year-over-year food prices were up 20%, according to the Food and Agriculture Organization (FAO).
The war further increased year-over-year prices by another 40% in March. The compounding issues, including the Russian invasion of Ukraine, as well as climate-related crop failures, are expected to reverse global trends in reducing hunger and malnutrition.
Some regions, such as East Africa and Madagascar, were already experiencing drought and famine due to agricultural system failures and climate change, and the price increases are expected to make the situation worse.
Meanwhile, corn futures dropped after the report signaling bigger inventories before settling unchanged. Soybeans jumped sharply, as much as 2.7%, the most in a month, with the US ending stockpiles coming in much lower than expected.
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