Poor weather in major exporters from Russia to Australia is causing deteriorating harvests and rising costs of farm staples, according to a report from Bloomberg.
The Bloomberg Agriculture Spot Index, which tracks nine farm commodities, is headed for its largest weekly gain since July, as droughts, frosts, and heavy rains appear across key growing regions. Climate change and geopolitical concerns are likely to keep prices high for these commodities, Paul Bloxham, chief economist for global commodities at HSBC Holdings, told Bloomberg.
Price gains have been fueled in large part by declining harvest prospects in Russia, a top exporter. More downgrades are likely in the next couple of weeks, according to Dennis Voznesenski, associate director of sustainable and agricultural economics at Commonwealth Bank of Australia.
Severe droughts in Vietnam, meanwhile, is putting robusta coffee on track for a fourth year of deficits—in turn causing a weekly price increase for robusta coffee of about 9%, Bloomberg notes. And in Brazil, a dismal harvest is pushing up orange juice prices, and other weather woes are putting Asian rice prices to a 15-year high.
Cocoa futures in New York are poised for a weekly gain of almost 12%. Futures have resumed a rally due to f
Falling cocoa bean inventories are causing concern for cocoa futures, which are expected to see a weekly gain of almost 12%. Bloomberg points to a recent report from the International Cocoa Organization, which expects cocoa prices to remain high throughout the current season’s mid-crop.
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