Grain prices are set to climb to even higher heights in 2021 amid challenging long-term weather forecasts for many of the world’s key crop-growing areas, analysts have said.
Agricultural finance specialist Rabobank said poor harvests and coronavirus-linked stockpiling is likely to create a period of agri-commodity inflation that won’t ease until at least midway through 2021.
La Niña, an atmospheric phenomenon that warms the ocean waters in the Pacific and affects rainfall, would pose a challenge for the development of wheat crops around the world, it said.
The crop has already reached its highest global price since 2014 even as stocks have increased, amid strong demand from importing nations looking to secure supplies.
Stefan Vogel, global strategist and head of agri-commodity markets at Rabobank, said: “The current circumstances have given farmers some respite after years of stubbornly low prices, but 2021 brings its own risks.
“Even with rising hopes of a vaccine, Covid-19 remains a risk that’s difficult to predict, while La Niña has the potential to hit crop yields across the world.
“Wheat, corn and soya bean prices are set to remain high and could increase further, with farmers continuing to take advantage of the favourable production and exporting conditions.
In the UK, ex-farm UK average spot prices for grains and oilseeds edged up on the week, with feed wheat and feed barley both closing up by just over £1/t to £187/t and £141/t respectively (27 November).
Oilseed rape edged back slightly from its highest point of the year, falling from £357.38/t to £356.62/t.
Jonathan Lane, ADM Agriculture’s head of grain trading, said: “With the seasonal logistics starting to kick in and the need for the UK to start pricing in additional imports, ex-farm prices should remain supported.
“Sterling has continued its firmer trend, helped by reports that a post-Brexit trade deal can be reached prior to the 31 December deadline, which hopefully will result in more transparency on how the UK will trade internally and externally before 1 January 2021.”