RABOBANK analysts are predicting the high food prices that led to strong values throughout the agricultural supply chain will again be a feature in 2022.
Subscribe now for unlimited access to all our agricultural news
across the nation
or signup to continue reading
Grains and oilseeds, along with palm oil, coffee and sugar are all likely to remain near the high point in the pricing cycle, as adverse weather, inflation along supply chains and logistical strains stay likely to continue, according to Rabobank's annual Agri Commodity Markets Outlook report.
The specialist food and agribusiness said the La Nina weather pattern, so beloved by Australian farmers, at least up until harvest, was a negative in key grain producing regions in North and South America.
This in turn will continue to keep pressure on global food production according to Rabobank head of agri commodities Carlos Mera.
Mr Mera also said high input costs were a factor for growers.
He said the normal flow-on from high prices of a big increase in plantings and thus supply may not apply due to equally high input prices.
Normally when farmers globally see such high prices they plant more to take advantage of the opportunities but with both fertiliser and herbicide prices sky-high Mr Mera warned this may not be the case.
"There will be no return to pre-pandemic prices in 2022," Mr Mera said.
"While Covid-19-related disruption will subside, inflationary pressures and adverse weather will hit producers, making them unable to significantly expand output," he said.
Mr Mera also warned the spectre of food inflation would be an issue closely monitored by governments across the world, especially in poorer nations where residents are acutely attuned to rises in the price of food staples.
"Inflation in food staples like wheat have previously been credited to contributing to societal unrest, including the Arab Spring," Mr Mera said.
"Higher farm input costs, expensive shipping and strong demand make for a toxic recipe," he said.
Through Europe, Mr Mera said eyes would be on Russia to see whether its export tax will materially affect wheat supplies, although he expected there to be a small surplus in wheat, a big contrast to this year's deficit.
Inflation will also squeeze corn farmers' yields, with higher prices of fertiliser, seed, machinery, labour and rent impacting production. Growing demand for corn-based ethanol in the US will also impact corn's availability for food products in other markets, which will feed through to consumer prices.
Mr Mera said increased environmental responsibilities would also be a big influence on agriculture in 2022.
"The race to net zero is speeding up, which is impacting sourcing and trading decisions, as well as consumer choices," he said.
"Farmers will face tough decisions in 2022 that could impact societies across the world for years to come."
Start the day with all the big news in agriculture! Sign up below to receive our daily Farmonline newsletter.
Gregor Heard
Gregor Heard is ACM's national grains industry reporter, based in Horsham, Victoria. He has a wealth of knowledge surrounding the cropping sector through his 15 years in the role. Prior to that he was with the Fairfax network as a reporter with Stock & Land. Some of the major issues he has reported on during his time with the company include the deregulation of the export wheat market, the introduction of genetically modified crops and the fight to protect growers better from grain trader insolvencies. Still involved with the family farm he is passionate about rural Australia and its people and hopes to use his role to act as an advocate for those involved in the grain sector.
Gregor Heard is ACM's national grains industry reporter, based in Horsham, Victoria. He has a wealth of knowledge surrounding the cropping sector through his 15 years in the role. Prior to that he was with the Fairfax network as a reporter with Stock & Land. Some of the major issues he has reported on during his time with the company include the deregulation of the export wheat market, the introduction of genetically modified crops and the fight to protect growers better from grain trader insolvencies. Still involved with the family farm he is passionate about rural Australia and its people and hopes to use his role to act as an advocate for those involved in the grain sector.
