S\u00e3o Paulo \u2013 The United Nations Food and Agriculture Organization (FAO) has warned that the United States\u2019 maize and Russia\u2019s wheat crop failures are driving up these commodities\u2019 prices and threatening food security worldwide. The risk is there and specialists estimate that the world will need at least two bumper crops in the next few years for inventories to be replenished and prices to drop. On the other hand, poor global agricultural performance is causing Brazilian farmers\u2019 profits to hike. In Brazil, maize output will be an all-time high, and some of the wheat has been sold even before it has been harvested.<\/p>\n
According to Lucilio Alves, a grain researcher at Esalq\/USP\u2019s Centre for Advanced Studies in Applied Economics, the maize inventory-to-consumption ratio around the world right now is the lowest since the 1973\/1974 crop. Alves notes that 41% of all maize is used as either food or as a food industry input. The commodity is also one of the main raw materials in animal feed manufacturing.<\/p>\n
\u201cRight now, the prices of some commodities are higher than they were in 2008, and an eventual food crisis was already being considered back then. It will take two bumper maize crops in order for supply and demand to even out,\u201d he says. <\/p>\n
A technical and economic analyst at the Organization of Cooperatives of the State of Paran\u00e1 (Ocepar, in the Portuguese acronym), the agricultural engineer Robson Mafioletti also believes record-high crops will be required in order to halt prices from hiking and causing food insecurity. <\/p>\n
\u201cRight now, maize is selling for an average of US$ 8.50 per bushel and soy is selling for US$ 17.50, which are among the highest-ever prices. According to forecasts, maize may reach US$ 10 and soy may go as high as US$ 20. The world will need two to three very good crops. The demand will not decline enough that it will accommodate crop failure,\u201d he claims. One bushel weighs approximately 27.2 kilograms.<\/p>\n
According to Mafioletti, the United States will refrain from producing up to 100 million tonnes this year of maize as a result of the crop failure. Russia, whose wheat output reached 56.2 million tonnes in 2011, is expected to produce 43 million in 2012. The country is expected to export 8 million tonnes of wheat in 2012. Last year\u2019s output was 21 million tonnes. Ukraine also had a wheat crop failure: down from 22 million tonnes in 2011 to 15 million this year.<\/p>\n
Wheat prices are on the rise. At the Chicago Mercantile Exchange, the settlement price for futures contracts was US$ 8.96 per bushel as of last Wednesday (22nd). A year earlier, the settlement price of a wheat bushel was US$ 7.35. During the period, the price was up 22%.<\/p>\n
According to Modesto Daga, an agricultural engineer and consultant in Cascavel, Paran\u00e1, approximately 5.5 million tonnes of wheat will be produced and 11 million tonnes will be consumed this year in Brazil. The demand is twice as large as the output, and the country, which is the second leading importer of the commodity in the world, following Egypt, will keep on buying. Still, Brazil will export because bullish prices and declining international supply are getting farmers\u2019 spirits up. \u201c[The state of] Rio Grande do Sul hasn\u2019t even begun harvesting wheat yet, and already one third of the forecasted crop has been sold,\u201d says Daga.<\/p>\n
Mafioletti says Brazil may supply markets in North Africa which would buy from Eastern Europe if not for the crop failure. \u201cIn the past, wheat was the foundation of our agriculture, but we are no longer major producers. Now, farmers are exporting to escape the grip of the industry (the mills). We may go back to selling to Egypt, Algeria, Nigeria and Libya, to whom we exported back in 2010,\u201d he says. Brazil is expected to export 1.9 million tonnes this year. The country exported 2.3 million tonnes in 2011 and 1.3 million tonnes in in 2010. \u201cThe outlook is interesting when it comes to prices, and they should not drop right away,\u201d Mafioletti forecasts. <\/p>\n
*Translated by Gabriel Pomerancblum<\/b><\/p>\n","protected":false},"excerpt":{"rendered":"
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