The prices grow under the conditions of de facto oversupply. Global reserves and harvest expectations are at record levels.

The Wall Street Journal has recently informed that the prices for wheat and rice in the world have rapidly increased because of the COVID-19 epidemics.

Wheat futures contracts on the Chicago Commodities Exchange increased by 15% between the middle and the end of March and reached 5,72 USD per bushel (more than by 131 USD per ton, ed.). The value of Thai rice, which is considered to be a benchmark in the global market, has increased by 17% since the beginning of the year and now amounts to 490 USD per ton.

It has been mentioned that the food products become more expensive all around the world because of the constantly growing great consumer demand. In order to support a food security, states impose restrictions on exports of key commodities. For example, Russia, Kazakhstan and Ukraine have already announced about temporary restrictions for exports of wheat. Bloomberg wrote that Vietnam, which is one of the world largest rice producers, has also informed about restricting exports of this products. In return, the traditional rice importers of wheat and rice, increase the volumes of imports and this influences prices on these products.

At the same time, the experts say that the prices grow under the conditions of de facto oversupply. According to the data provided by the U.S. Department of Agriculture, the world production of white rice in 2019-2020 is evaluated at 500 million tons and this is really close to a record number. The global reserves amount to 180 million tons and this is a historical peak.

Talking about wheat, the situation is almost the same because some countries increase its production volumes. According to the information provided by the U.S. Department of Agriculture, in 2019-2020 the record yield volume is expected. It can amount to 764,5 million tons.

WHO and WTO have earlier warned about a shortage of some products. They think that the measures taken by all countries of the world in order to prevent spread of coronavirus can cause problems with food products supplies and because of this prices will rapidly grow.  First of all, it concerns the agricultural sector, the food industry and the transport sector.

Reference source: Korespondent