Monday, 16 May, 2022, 11:39 PM
Advance Search
latest
Home Business

Climate change rocks agricultural commodity markets

Published : Sunday, 14 November, 2021 at 12:00 AM  Count : 229

LONDON, Nov 13: Agricultural commodities such as coffee, cotton and wheat faced sharp price swings this year as output was hit by extreme weather sparked partly by climate change.
According to analysts, volatile weather conditions and temperatures have adversely impacted crop growth, harvest and supply in key exporters. "The weather has certainly created tightness in the (agricultural) markets," Sucden analyst Geordie Wilkes told AFP.
That has stoked prices of soft commodities at a time when global inflation is already soaring due to the post-pandemic demand recovery and supply-chain snarl-ups.
Climate change is under the spotlight as global powers at the two-week COP26 summit in Glasgow attempt to reach agreement to slow the pace of global warming.
Brazil, the world's biggest coffee producer and a major player in corn, was gripped in April by a severe drought, which sent prices briefly spiking on supply woes.
Just three months later in July, the South American giant suffered harsh frosts that pushed coffee prices to multi-year peaks.
Arabica coffee topped $2 a pound -- the highest since 2014 -- and still remains close to this level.
Elsewhere, southwestern Canada and the northern plains in the United States faced a prolonged springtime drought that damaged wheat production.
Wheat prices were ignited and still remain close to historic highs, with soft wheat trading at $300 per tonne on Euronext.
Experts forecast the frequency of extreme weather events such as droughts, wildfires, floods and typhoons, will simply accelerate.
"The frequency of extreme weather events seen over (recent) years leads us to believe that these events will likely happen more often in the future and therefore agricultural commodity prices will remain elevated," Rabobank analyst Carlos Mera told AFP. Wilkes agreed that the outlook was gloomy for soft commodity growers as weather patterns become "more volatile, more extreme".
Climate change, coupled with Amazon deforestation, was "changing weather patterns and increasing" the frequency of such extreme weather events, he noted.
Volatility can also occur when investors find it difficult to anticipate prevailing weather conditions in key production areas.
Market swings are likewise amplified by the uneven distribution of crops around the world -- and the dependency on one country for certain crops, as is the case with arabica coffee in Brazil. Arabica, for example, is prone to volatility "because this is mainly grown on the highlands, where weather can fluctuate more strongly and crop losses can be more severe", said Commerzbank analyst Carsten Fritsch.    AFP



« PreviousNext »



Latest News
Most Read News
Editor : Iqbal Sobhan Chowdhury
Published by the Editor on behalf of the Observer Ltd. from Globe Printers, 24/A, New Eskaton Road, Ramna, Dhaka.
Editorial, News and Commercial Offices : Aziz Bhaban (2nd floor), 93, Motijheel C/A, Dhaka-1000. Phone: PABX 223353467, 223353481-2; Online: 9513959; Advertisement: 9513663.
E-mail: [email protected], [email protected], [email protected], [email protected],   [ABOUT US]     [CONTACT US]   [AD RATE]   Developed & Maintenance by i2soft