Global food supplies could remain strained in 2024

Prices of rice and many other grains are forecast to rise next year, as supplies tighten due to weather and export bans.

High food prices over the past few years have prompted farmers around the world to plant more grains and oilseeds. But consumers will still face tight supplies next year, thanks to El Nino and export restrictions.

Wheat, corn and soybean prices are falling as tensions in the Black Sea ease and global recession fears ease. But prices could still be hit by supply shocks in the new year, analysts and traders say.

“The grain supply picture for 2023 has improved, with many key growing regions producing bumper crops. However, we are not completely out of the woods yet,” said Ole Houe, director of advisory services at Australian agricultural brokerage IKON Commodities.

He said El Nino would continue to affect crops until at least May 2024. Brazil is planting less corn. China is importing more wheat and corn from abroad.

Rice samples are displayed for sale at a shop in Assam, India. Photo: Reuters — Rice samples are displayed for sale at a shop in Assam, India. Photo: *Reuters*

The El Nino weather phenomenon will cause drought in many parts of Asia next year. El Nino is forecast to last until the first half of 2024, threatening supplies of rice, wheat, palm oil and many other products.

Global rice supplies were already down this year due to El Nino, which is part of the reason India banned rice exports. The country is currently the world's largest rice exporter.

While other grains have fallen, rice prices have hit a 15-year high this year, with prices in some Asian export hubs up 40-45%.

India’s upcoming wheat crop is also threatened by water shortages, which could force the world’s second-largest wheat consumer to import for the first time in six years as domestic stocks are at a seven-year low.

In Australia, the world’s second-largest wheat exporter, farmers will have to plant a new crop in dry weather after months of El Nino-induced drought that ended hopes of three consecutive years of record harvests.

This could prompt buyers, including China and Indonesia, to look for more from other countries in North America, Europe and the Black Sea. “Wheat supplies in 2023/24 could decline compared to the previous season, due to a sharp decline in exports from key producing countries,” Commerzbank said.

Global palm oil production is also forecast to decline next year, due to El Nino. This could push up prices for the oil. The decline comes at a time when demand for palm oil-based cooking oil and biofuels is expected to rise.

"Global grain and oilseed supplies are tightening. The Northern Hemisphere will see an El Nino throughout the growing season for the first time since 2015. The US dollar will continue to depreciate next year. Global demand will return to a long-term growth trend," said CoBank, a leading agricultural lender in the US.

However, the bright spot is that supplies of corn, wheat and soybeans from South America are forecast to improve in 2024. In Argentina, abundant rainfall in key growing regions is forecast to boost soybean, corn and wheat production. Argentina is one of the world’s largest grain exporters.

Brazil could also achieve near-record agricultural output in 2024. But its erratic weather has raised doubts.

Ha Thu (according to Reuters)

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