Business

Food inflation: Tight grain, oilseed supplies to keep prices elevated

Published

2 years ago

Farwa

SINGAPORE: Drought or too much rain, the war in Ukraine and high energy costs look set to curb global farm production again next year, tightening supplies, even as high prices encourage farmers to boost planting.

Production of staples such as rice and wheat is unlikely to replenish depleted inventories, at least in the first half of 2023, while crops producing edible oils are suffering from adverse weather in Latin America and Southeast Asia.

“The world needs record crops to satisfy demand. In 2023, we absolutely need to do better than this year,” said Ole Houe, director of advisory services at agriculture brokerage IKON Commodities in Sydney.

“At this stage, it looks highly unlikely, if we look at the global production prospects for cereals and oilseeds.”

Wheat, corn and palm oil futures have from dropped from the record or multi-year highs but prices in the retail market remain elevated and tight supplies are forecast to support prices in 2023.

Why it matters

With food prices climbing to record peaks this year, millions of people are suffering across the world, especially in poorer nations in Africa and Asia already facing hunger and malnutrition.

Food import costs are already on course to hit a nearly $2 trillion record in 2022, forcing poor countries to cut consumption.

Benchmark Chicago wheat futures jumped to an all-time high of $13.64 a bushel in March after Russia’s invasion of key grain exporter Ukraine reduced supplies in a market already hit by adverse weather and post-pandemic restrictions.

Corn and soybeans climbed to their highest in a decade, while Malaysia’s benchmark crude palm oil prices climbed to a record high in March.

Wheat prices have since dropped to pre-war levels and palm oil has lost around 40% of its value, amid fears of a global recession, China’s COVID-19 restrictions and an extension of the Black Sea corridor deal for Ukrainian grain exports.

What does it mean for 2023?

While flooding in Australia, the world’s second-largest wheat exporter, in recent weeks has caused extensive damage to the crop which was ready for harvest, a severe drought is expected to shrink Argentina’s wheat crop by almost 40%.

This will reduce global wheat availability in the first half of 2023.

A lack of rainfall in the US Plains, where the winter crop ratings are running at the lowest since 2012, could dent supplies for the second half of the year.

For rice, prices are expected to remain high as long as export duties imposed earlier this year by India, the world’s biggest supplier, remain in place, traders said.

“Rice availability in most exporting countries is pretty thin except India, but it has export duties in place to reduce sales,” said one Singapore-based trader at an international trading company.

“If we get a production shock in any of the top exporting or importing counties, it can really swing the market upside.”

The outlook for corn and soybeans in South America looks bright for its harvest in early 2023, although recent dryness in parts of Brazil, the world’s top bean exporter, has raised worries.

US domestic supplies of key crops including corn, soybeans and wheat are expected to remain snug into 2023, according to the US Department of Agriculture.

The agency is forecasting US corn supplies to fall to a decade low before the 2023 harvest, while soybean stocks were seen at a seven-year low and wheat ending stocks are forecast at the lowest in 15 years.

Palm oil, the world’s most consumed edible oil, is taking a hit from tropical storms across Southeast Asia where high costs have resulted in lower use of fertilizer.

Still, higher prices of grains and cereals have encouraged farmers to plant more crops in some countries including India, China and Brazil.

“Planting is higher in several countries but the output is expected to remain subdued due to adverse weather and other factors,” said Ole. “Production is unlikely to be enough to replenish supplies which have been drawn down.”

Explore the Reuters round-up of news stories that dominated the year, and the outlook for 2023.

Business

The amount of trade between Saudi Arabia and Pakistan hits $700 million.

Published

8 hours ago

Farwa

Through the Special Investment Facilitation Council (SIFC), Pakistan’s trade connections with Saudi Arabia have grown significantly, with bilateral trade volume rising from $546 million to $700 million and exports to the Kingdom growing by 22%.

As bilateral economic cooperation continues to grow, Saudi investors have shown a strong interest in Pakistan’s construction, energy, agricultural, and information technology sectors. The objective for exporting IT services between the two countries has been raised from $50 million to $100 million.

Saudi Arabia has set up a help desk dedicated to making it easier for Pakistani IT companies to register in the Kingdom in order to expedite commercial procedures. The goal of this program is to speed up economic collaborations between the two countries and lower administrative barriers.

The well-known Saudi restaurant chain AlBaik has revealed plans to open locations in Pakistan, which is a big step for the food service industry and should lead to the creation of new job possibilities in the area.

Officials have noted that stronger business links between the two countries lead to greater economic stability, and the SIFC has played a crucial role in promoting these trade advancements. For bilateral trade and investment projects, the Council remains a crucial facilitator.

According to a trade official with knowledge of the developments, “the establishment of dedicated support mechanisms, such as the help desk for IT companies, demonstrates a commitment to long-term economic partnership,” The goal of these programs is to improve the conditions for commercial collaboration between the two nations.

The increasing amount of trade and the diversity of investment sectors show that Saudi Arabia and Pakistan’s economic ties are changing as both countries seek to deepen their business alliances in a number of industries.

Business

After more than 50 years, Bangladesh and Pakistan resume direct trade.

Published

8 hours ago

Farwa

After more than 50 years, the two governments will resume direct bilateral trade, with Bangladesh’s food ministry announcing Sunday that it will receive a supply of 25,000 tonnes of rice from Pakistan next month.

After former Prime Minister Sheikh Hasina was overthrown last August, relations between Bangladesh and Pakistan have begun to improve after decades of tense relations.

Since then, there have been increased bilateral interactions between Bangladesh and Pakistan. Nobel laureate Muhammad Yunus, the interim government’s senior adviser, has met twice with Pakistani Prime Minister Shehbaz Sharif.

According to the food ministry, Dhaka completed an agreement earlier this month to import grains from Pakistan.

“On March 3, the first shipment of 25,000 tonnes will reach Bangladesh,” Zia Uddin Ahmed, a ministry assistant secretary, told Arab News.

“This is the first time that Bangladesh has started importing rice from Pakistan at the government-to-government level since 1971.”

Following direct maritime contact between the two South Asian countries in November—a Pakistani cargo ship stopped in Bangladesh for the first time since 1971 with imports and exports arranged by private companies—their trade relations grew.

Resuming trade with Pakistan is a significant step for Bangladesh, according to Amena Mohsin, a lecturer at North South University and a specialist in international relations.

“We want to see progress in our bilateral relationship with Pakistan. Most significantly, we are currently going through a low point dispute with India, even though we constantly diversify our partnerships.

This most recent move to purchase rice from Pakistan is really significant in this context,” she told Arab News.

Business

The total amount of Pakistan’s liquid foreign reserves is $15.95 billion.

Published

3 days ago

Farwa

As of February 14, Pakistan’s total liquid foreign reserves were $15,947.9 million, with the State Bank of Pakistan’s (SBP) holdings being $11,201.5 million.

Official figures for the week ending February 14, 2025, show that the central bank’s liquid foreign exchange reserves rose by $35 million to $11,201.5 million.

Commercial banks maintained net foreign reserves of $4,746.4 million during the period under review, according to the breakdown of foreign reserves.

The nation’s total liquid foreign reserves as of the week ending February 07, 2025, were $15,862.6 million.

Of these, the central bank held $11,166.6 million in foreign reserves, while commercial banks kept $4,696 million in net reserves.