iStock/ Sean Pavone
- Natural catastrophes and bad weather have wreaked havoc on food crops across the world.
- Orange juice futures, cacao beans, and rice have hit all-time highs of late – while Chinese pork has slumped.
- Here's a round-up of the main movements in food commodity prices this week.
Natural disasters, adverse weather, and invasive diseases have all helped wreak havoc on the market for some of the world's most important foodstuffs.
A succession of hurricanes and deadly bacteria have ravaged American oranges, while heavy rainfall has rotted cacao beans in West Africa. As of Wednesday, Asian rice hit its highest price in almost 15 years; while in China, pork prices have slumped so far that they have dragged inflation into negative territory.
Here's a roundup of what's been happening in the world of soft commodities lately.
Orange juice
Orange juice futures hit an all-time high on July 28, as citrus crops all across the US have been hammered by a series of hurricanes and the spread of 'citrus greening', an incurable disease spread by insects.
The ICE US frozen orange futures index touched a record 317.5 (USc per lb) – a metric that reflects orange juice production in the US as the lowest in "over 100 years", Matthew Joyner, chief executive of Florida Citrus Mutual, told the Financial Times.
The vast majority of oranges produced in the US come from Florida, which has been hobbled by hurricanes and a cold snap, massively hampering supply. Not only adverse weather conditions, but the resurgence of the pathogen, has ravaged crops in both America and Brazil.
Such headwinds are responsible for the supply shortage in oranges, which has driven up prices that will eventually filter through to consumers.
Chinese pork
Chinese pork prices have fallen by over a quarter since the previous July as an oversupply of meat has weighed heavily on consumer food prices, pushing the Asian state into a period of deflation.
Pork plays an important part in the makeup of China's Consumer Price Index basket, accounting for around 3% of it, per the Economist Intelligence Unit. "A rough rule of thumb is therefore that a 10% increase in the pork price will push up the CPI by 0.3%," the EIU said in a research note, underscoring the animal's importance to the economy.
Data from the National Bureau of Statistics showed that pork prices have fallen 26% in July year-on-year, a significant fall for the world's largest producer and consumer of the meat. The decline in prices can be attributed to oversupply in the market, caused by a backlog after a bad outbreak of African swine fever.
Cocoa beans
Orange juice is not the only sweet to see its value jump recently – on Monday, cocoa bean futures surged to their highest levels since 2011, according to data by Barchart.
The beans, used primarily in chocolate, are rallying amid a supply crunch caused by heavy rainfall and the spread of a black pod disease in West Africa, which has rotted cocoa pods.
The spread of the blight caused by the extreme wet weather could result in lower crop quality and production, pushing the global cocoa market into a third year of deficit for the 2023/24 season, according to Barchart.
Asian rice
Rice has not been this expensive in almost 15 years, as exceptionally dry weather in Thailand and India and the banning of its own exports foster a global shortage in the crop.
The price of Thai white rice 5% broken has hit $648 a ton – the highest since October 2008 – according to Bloomberg data from the Thai Rice Exporters Association released Wednesday.
Amid the onset of El Niño, where water temperature in the Pacific rises, Thai farmers are being encouraged to switch to growing crops that require less water. While India, another key producer, last month extended its export ban to protect domestic supply – and this has increased fears of a supply shortage.
Rice is integral to the diets of billions of people around the globe, and a shortage may potentially spell catastrophe for households.