From the coffee from the morning to the roasts at dinner time, the prices of the main food basics are on the rise.
The Bloomberg Agriculture Spot Sub-Index, which tracks nine agricultural commodities, is nearing an all-time high. Prices in markets for grains, oilseeds and soft commodities rise as supply shortages abound, a sign that the inflation of food, already affecting consumers around the world, will stop soon.
This year “is going to be a very peculiar year,” Peder Tuborgh, chief executive of Denmark-based Arla Foods, told a news conference on Thursday. “Demand has to cool down. You can’t eat or drink something that isn’t available, and the price alone can make it cold.”
The company, the world’s fifth-largest dairy processor, said inputs from energy to packaging rose 10% in January compared to a year ago. Also, unlike volatile commodity cycles in the past, farmers are unlikely to increase output significantly, Tuborgh noted.
That echoes supply challenges raging in crop markets. Stocks of Arabica coffee in exchange warehouses fell this week to a 22-year low, while a report from the US Department of Agriculture lowered its estimate for world stocks of wheat and cotton.
The drought has also spread to key soybean-growing regions of South America, as well as West African nations that produce most of the world’s cocoa. On the other hand, farmers face challenges stemming from skyrocketing costs for fertilizer, pesticides and diesel.
“Prices are rising due to strong demand and declining stocks, and supply chain challenges continue to be an issue,” said Judy Ganes, president of J. Ganes Consulting.
Rises in food markets threaten to hit regions that rely on imports the hardest. A milling association in Cameroon this week halted flour deliveries due to rising wheat costs.
