Food Scarcity on the Forefront

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According to the U.S. National Oceanic and Atmospheric Administration (NOAA), 2021 was the sixth hottest year in recorded history. However, this does not begin the story.

The two previous years (2020 and 2019) rank as the two hottest years in recorded history. In fact, the years 2013-2021 all rank among the 10 hottest years in the recorded history of the planet. As if this was not enough, one must go back 45 years, to 1977, to find a year when the planet was below the mean of recorded temperatures. Faced with this data, it is hard to deny the planet is getting warmer and has been doing so for many years.

Presumably, this has grave implications for many aspects of life—not the least is global food production. Rising temperatures threaten the ability to grow sufficient food as the environment in which they are grown transforms beyond optimal conditions.

Global Land and Ocean Temperature Anomalies

The US Department of Agriculture has projected that 2022 EU milled rice output will dip by 21% on year to 1.35 million mt in its latest Grain and Feed update released July 29.

In addition to the on-year drop, it also represents a 7.7% decline from its previous forecast. While the harvested area forecast was maintained at 357,000 hectares – down by 11% on year – both the average field yield and milling rate were revised down from previous forecasts. The average field yield was projected at 5.9 mt/ha, down by 9.8% on year and by 7.4% from the previous forecast.

The drop in the USDA's forecasts comes amid droughts across much of Western Europe. The USDA specifically points to "low irrigation water availability in Spain (Guadalquivir River basin) and, to a lesser extent, in Greece and Portugal."

According to the latest estimate from the Ministry of Agriculture, Fisheries and Food, Spain 2022 planted area was projected at 52,600 hectares – down by 39% on year and by 48% from 2020's area.

EU Milled Rice Output

The Platts Market Data - Agriculture dataset provides access to the full breadth and depth of our agriculture market data, including benchmarks and contract price assessments. The assessments provide a basis for trade across commodities and the world and allows you a more connected view of the influences on the price of sugar, grains, oilseeds, vegetable oils, animal feed & protein and biofuels.

MV Ocean Lion has sailed from Ukraine's port of Chornomorsk early Aug. 9 destined for South Korea, bringing the total to 12 ships to leave Ukraine since Turkey and the UN brokered a deal to resume grains shipment via a humanitarian maritime corridor out of the Black Sea.

The bulk ship -- the largest to have left the Black Sea since the suspension -- is loaded with 65,000 mt of feed-grade corn destined for Incheon, South Korea, according to market sources. The corn was sold by Viterra to KFA Incheon before Russia's invasion of Ukraine, and the ship had been stranded at the port due to Russia's naval blockade and Ukraine's subsequent defensive mining of the waters, sources added.

Another ship, MV Rahmi Yagci, also left Chornomorsk carrying 5,300 mt of sunflower destined for Istanbul.

More than 370,000 mt of agricultural commodities had been shipped out of Ukraine since Aug. 1, according to data by S&P Global Commodity Insights.

On Aug. 1 the bulk carrier Razoni, flying under the flag of Sierra Leone, departed Ukraine’s Port of Odesa carrying a grain shipment. According to the Ukrainian government, the Razoni was the first such ship to leave the country under a deal between Russia and Ukraine, brokered by Turkey and the U.N., to ease global food prices. Despite the agreement, volatility remains high for agricultural markets.

The agriculture markets have been packed with headline-grabbing events, with extreme price volatility for all major grains and oil seeds in the last two years.

Infographic: La Nina adds uncertainty to already troubled agriculture market

S&P Global Commodity Insights looks at how geopolitics and supply chain issues are impacting markets for grains, oilseeds and more.

2022 has brought about a highly volatile environment across commodities markets. Inflation, which began during the pandemic and was exacerbated by the Russian invasion of Ukraine, has sent agriculture markets soaring.

The market price of hogs, cattle, and poultry have all increased at a rate near or higher than their respective input costs. This has led to strong margins in the US and in most of the world. However, declining, and sometimes negative, margins are beginning to weigh on the livestock industry. Looking towards 2023, we expect a confluence of factors to reduce global livestock numbers. This is clear when examining each of the major livestock sectors.