Severe weather patterns have already led to disruptions in planting times in South America and the US which will influence soya bean and maize stocks globally. On a recent visit to South Africa, Sudakshina Unnikrishnan, Barclays Capital’s vice-president for commodities research told Farmer’s Weekly that US maize stocks are the lowest they have ever been, making the risk for food shortages bigger.
“Chinese food stocks are lower than previously thought and it is expected to restock its reserves. There will especially be an increase in China’s maize imports, placing pressure on global stocks. “Globally, food inventories are thin and they won’t be fixed in one season.”
Unnikrishnan explained that past weather patterns have resulted in a weak agricultural commodity supply and are set to continue with La Niña conditions prevailing. “Drought in Russia resulted in that country placing a moratorium on wheat exports. There will be a lot more export curbs this year across the globe.
Unnikrishnan said that Barclays didn’t anticipate the crude oil price falling and it would average at US$120/barrel for the next year. This means governments are set to stick with their biofuel inclusion rates and demand for maize and sugar cane will remain high. However, there is not a great concern that food prices will spike.
“Agricultural markets are the only markets that have declined year-on-year. This has been the case for the past 10 years. Even though agricultural prices seem higher, once they have been adjusted according to inflation, they will decrease.” She said that soya beans and maize show the biggest growth going forward while demand for wheat will reach a plateau, especially since the demand from China isn’t high.
“There is no scarcity of wheat at the moment and prices should remain the same. As a result, protein producers will replace maize with wheat in animal feed.” She concluded that hectares planted to maize this year are expected to be the highest since 1944, which should keep prices in check.