Runaway food inflation may be tamed soon – at least temporarily – as farm commodities tumble after a surge that pushed up prices of everything from bread toFour months after Russia’s invasion of Ukraine upended trade flows and sent futures soaring, fear of grain shortages is giving way to optimism that key producers will reap harvests large enough to help replenish war-pinched reserves.
The Bloomberg Agriculture Spot Subindex is on track for its biggest monthly drop since 2011. Along with easing concerns about dwindling grain and oilseed reserves, worries that an economic slump could slash demand also knocked soaring crop futures down from recent highs. While such changes can take time to reach grocery shelves, chicken and beef prices are cooling a bit, according to Darden Restaurants, owner of the Olive Garden and LongHorn Steakhouse chains.
The United Nations’ food price index pulled back from a record high in March after the war choked exports from Ukraine and triggered a raft of sanctions on Russia. Still, even if reduced rates of increase continue, high prices for food likely will continue pressuring the needy. A US government forecast released last week estimates that food prices across the board will climb as much as 8.5% this year, though the report didn’t account for the recent drop in agriculture futures.
Wheat and soybean futures have fallen about 15% this month, while maize has dropped 13%. Coffee, sugar and cocoa also have pulled back. High dairy prices probably peaked in the second quarter and will start to retreat through the rest of the year, according to a Rabobank report.