Climate Change and Food Prices

From Bloomberg:

Global food supplies will face “massive disruptions” from climate change, Olam International Ltd. predicted, as Agrocorp International Pte. said corn will gain to a record, stoking food inflation and increasing hunger.

“The fact is that climate around the world is changing and that will cause massive disruptions,” Sunny Verghese, chief executive officer at Olam, among the world’s three biggest suppliers of rice and cotton, said in a Bloomberg Television interview today. “We’re friendly to wheat, corn and soybeans and bearish on rice.”

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Corn futures surged 90 percent in the past year, while wheat jumped 80 percent and soybeans advanced 49 percent as the worst drought in at least half a century in Russia, flooding in Australia, excessive rainfall in Canada, and drier conditions in parts of Europe slashed harvests.

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Sales and shipments of wheat by the U.S. to Egypt, the world’s biggest buyer, jumped to 2.9 million tons since June 1, more than six times higher than the same period a year earlier, according to USDA figures dated Feb. 3.

Algeria bought 2.95 million tons of wheat from Dec. 16 to Jan. 26, according to crops office FranceAgriMer. That was “probably” the most the country had ever bought in a five-week period, said Xavier Rousselin, the office’s head of arable crops. Loadings of French soft wheat destined for Morocco more than tripled to 1.16 million tons from 350,000 tons a year earlier, the company said.

Hoarding of agricultural products will intensify, although it will have limited impact on prices because supplies are sufficient, Goldman Sachs Group Inc. analysts including Jeffrey Currie said in January.