More and more analysts believe that we are at the beginning of a global supercycle for agricultural products and other raw materials. This means a long-term boom in demand that keeps prices going up and even allows them to rise further.
German agricultural analyst Dr. Olaf Zinke writes about this in his article on the Agrarheute.com portal.
“In January, world prices for agricultural products rose for the eighth consecutive month - to the highest level since July 2014. This is evidenced by the export prices for agricultural raw materials and foodstuffs, which are collected monthly by the World Food Organization (FAO). Obviously, prices for all major food groups are skyrocketing - especially for grains, oilseeds and vegetable oils - but also for milk, meat and sugar
One of the triggers of the price rally is the coronavirus pandemic. This has disrupted supply chains around the world, led to buying in reserve by private consumers and entire countries, as well as numerous trade restrictions and skyrocketing food inflation in many important world markets such as China, Russia and Argentina.
China was the decisive trigger for the last boom in agricultural prices from 2011 to 2014, and only weakening Chinese demand, coupled with China's growing self-sufficiency, has stabilized.
Now this scenario may repeat itself, amplified by the consequences of the coronavirus pandemic. More and more analysts such as Brett Stewart, head of Global AgriTrends believe that we may be at the beginning of a global supercycle for agricultural products and other commodities. By this is meant a long-term boom in demand that supports prices and allows them to rise
Stewart commented: “We are at the beginning of a new agricultural supercycle. Prices for corn, wheat and soybeans are rising. We now have incredible demand for corn in China. China is also a driving force behind the world's beef, pork, poultry, corn and soybean markets. We will have a year when all major commodity markets serves one country. This will, of course, create some uncertainty for the markets and increase price volatility. But with a gradual recovery from COVID-19, we will see a global boom in global commodity markets. It is a fact that the rally in the energy and other commodity markets has already begun. There, crude oil prices rose 70 percent, and natural gas prices rose sharply. Of course, this also increases the costs of farmers. But if prices for agricultural products grow even faster, it will not be such a big problem for farmers. "
Source:
www.agrarheute.com. Based on the article by Dr. Olaf Zinke "World Agricultural Prices in High Spirits - New Super Cycle?"
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