Dry weather, export curbs to hit 2024 global supply of staples

Global food prices remain vulnerable to supply shocks & El Nino weather in 2024.

High food prices in recent years have prompted farmers worldwide to plant more cereals and oilseeds, but consumers are set to face tighter supplies well into 2024, amid adverse El Nino weather, export restrictions and higher biofuel mandates.

Global wheat, corn and soybean prices — after several years of strong gains — are headed for losses in 2023 on easing Black Sea bottlenecks and fears of a global recession, although prices remain vulnerable to supply shocks and food inflation in the New Year, analysts and traders said.

“The supply picture for grains certainly improved in 2023 with bigger crops in some of the key places which matter. But we are not really out of the woods yet,” said Ole Houe, director of advisory services at agriculture brokerage IKON Commodities in Sydney.

“We have El Nino weather forecast until at least April-May, Brazil is almost certainly going to produce less corn, and China is surprising the market by buying larger volumes of wheat and corn form the international market.”

The El Nino weather phenomenon, which brought dryness to large parts of Asia this year, is forecast to continue in the first half of 2024, putting at risk supplies of rice, wheat, palm oil and other farm products in some of the world’s top agricultural exporters and importers.

Traders and officials expect Asian rice production in the first half of 2024 to drop as dry planting conditions and shrinking reservoirs may cut yields.

World rice supplies tightened this year already after the El Nino weather phenomenon cut into production, prompting India, by far the world’s biggest exporter, to restrict shipments.