Problems with agricultural production can further increase food inflation
The price spread between hard winter wheat and soft winter wheat has hit a record high as droughts threaten crops in the Midwest and other major agricultural regions around the globe.
The premium of hard winter wheat over soft winter wheat is $1.72 a bushel (25.4 kg) in Chicago on Tuesday morning, breaking the 2011 record.
James Bolesworth, general manager of CRM AgriCommodities, told Bloomberg that the widening spread is "a factor in the drought in the US plains, which is having an adverse impact on crop conditions."
The latest report from the US Department of Agriculture found that Kansas (the top producer) has only 19% of its acreage in good or very good condition. Agritel analysts pointed out that the drought is affecting crops in other states :
- “Deterioration in yield ratings is also visible in Texas and Colorado.”
- Simultaneously, drought conditions plague the Canadian prairies. Farmers in the region are planting in some of the driest conditions in the last half century. They need adequate moisture to plant wheat and canola crops, otherwise this could lead to poor crop yields later in the growing season, which could impact global supplies.
“If there isn't good humidity, these little plants are very sensitive to adverse conditions,” said Bill Prybylski, farmer and vice president of the Agricultural Producers Association of Saskatchewan.
The possibility of a reduction in wheat production in the United States and Canada due to persistent drought conditions could aggravate the global food supply. The drought in Argentina has already reduced crop yields and the crisis-stricken Ukraine has forced farmers to cut back on plantations.
All of this means that global food inflation is likely to remain high for the foreseeable future. But what for someone will be just a problem of inflation, for someone else will be a problem of unavailability, that is, of hunger.
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The article The problems with agricultural production can cause food inflation to rise again comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/i-problemi-alle-produzioni-agricole-puo-far-ancora-crescere-linflazione-alimentare/ on Wed, 05 Apr 2023 06:00:38 +0000.