Consumers are loading up on pasta, rice and bread. Farm supply lines are disrupted. Countries are restricting agricultural exports.
The result: Prices of wheat and rice, two of the world’s staple grains, are rising sharply. Difficulties moving grain within countries and across borders, coupled with frenzied buying, could exacerbate the impact of the pandemic on the global food market.
The price of wheat futures trading in Chicago, the global benchmark, has risen 15% since mid- March and reached as high as $5.72 a bushel Monday, bucking the coronavirus-induced economic downturn that has hurt most commodity markets. European prices also jumped as quarantine measures in France, one of the world’s biggest wheat producers and a hotspot for coronavirus infections, made it difficult to transport grain.
Meanwhile the price of a variety of Thai rice, a key benchmark for international trade, has jumped 17% to $490 a metric ton since the start of the year, according to the International Grains Council.
The United Nations’ Food and Agriculture Organization says logistical issues, along with the falling value of emerging-market currencies, are conspiring to make grains more expensive for food-importing nations. That has the potential to create a food crisis in poorer countries, as well as regions hit hard by the pandemic.
“We have a perfect storm of sorts right now,” said Abdolreza Abbassian, senior economist at the UN’s FAO.
To be sure, the world isn’t about to run out of food. Stockpiles of grains and oilseeds are high thanks to a series of strong harvests and the rise of Russia, Ukraine and countries in Latin America as major agricultural exporters.
A record-breaking global wheat crop of 764.5 million metric tons is expected in the 2019-20 season, which ends in August, according to the U.S. Department of Agriculture. “There is still enough wheat on the planet to feed everyone,” said Tom Houghton, an analyst at AgriCensus. But getting it to the right places is proving a problem. More eating in and less dining out has created “short-term dislocations” as food suppliers switch from making restaurant products to consumer goods, according to Dave Marshall, a farm marketing adviser with Nashville, Ill.-based broker First Choice Commodities.
“As restaurants close down, consumers know they have to cook from home,” Mr. Marshall said. “Consumers have to rebuild their inventory to eat at home.”
In France, which had more than 40,000 confirmed Covid-19 cases as of Monday, the grain industry has struggled with a shortage of truck drivers. And trucking companies have increased the cost of transporting grain to ports because there are fewer factory goods to carry into the French interior on the return leg, said Andrée Defois, president of Tallage, a consulting firm.
Also spooking traders: Some major food exporters are restricting shipments in order to keep a lid on domestic food-price inflation and protect domestic supplies. Russia, the world’s largest wheat exporter, is set to limit the amount of grain it sells overseas from April through June to seven million tons.
Kazakhstan and Vietnam have temporarily banned exports of wheat flour and rice, respectively. Kazakhstan’s agricultural ministry said Monday it would lift that ban and impose a new quota on wheat exports instead.
Countries that rely on imported grains to feed their populations have ramped up purchases to ensure they have sufficient stockpiles to see out the pandemic. President Abdel Fattah Al Sisi of Egypt, the world’s biggest wheat importer, has told officials to increase the size of the country’s food reserves. Turkey bought 175,000 tons of wheat in an international tender Friday, according to AgriCensus, after Saudi Arabia bought 1.2 million tons of barley for animal feed.
“Countries right now are showing that they want to import sufficient stockpiles in case there’s a lockdown,” said Michael Magdovitz, an analyst at Rabobank. The pandemic could lead to longer-lasting changes in the grain market, he said, with countries holding larger strategic food reserves and becoming less reliant on a steady stream of imports.
In the U.S., the timing of the coronavirus-related squeeze also comes as farmers are expected to plant fewer acres of wheat than they have done in over a century. The USDA forecasts that farmers, which are turning toward more profitable corn and soybean crops, will plant 45 million acres of wheat this year, the lowest number since 1909.
As mills in the Midwest rushed to buy grain from growers, the price they paid for a bushel of soft red winter wheat rose up to 35 cents above the price on the Chicago Board of Trade, an indication of a strong level of demand.
Millers, which grind wheat into flour, have gone into overdrive to meet rampant demand for staple foods. U.S. grain mills have been working “as fast as they can,” said a spokesman for the North American Millers’ Association.