As the ongoing cost-of-living crisis continues to persist alongside high levels of food inflation throughout the UK. Consumers will be interested to note that the price of soybean, wheat, and corn have most fallen in value on the AvaTrade platform over the past week, highlighting a long-awaited correction to pricing on the food market.
This comes during a period in which food inflation has retreated to its lowest level this year, coming at 13.4% in July – a fall from its rate of 14.6% in June. Though this shift signals respite, the global soft commodities market is still expected to drop even further.
According to Kate Leaman, chief market analyst at AvaTrade, the price of soft commodities is currently falling.
Leaman said, “Looking at our most falling table this week, three of the top five instruments which had seen a price drop were soft commodities. In America, wetter and cooler weather conditions in recent weeks in the Midwest have increased prospects of a good harvest for the trio of soybean, wheat, and corn.
“These conditions are as a result of the weather phenomenon known as El Niño, which brings about increased rainfall to North America. This has resulted in the output for all three commodities in both Canada and the USA actually benefitting from the heavy rains brought about by El Niño.
“As these countries are two of the largest global exporters of the commodities, this has seen prices fall.
“What’s more, as the world’s largest supplier of soybeans, Brazil has proved itself a formidable competitor in the global market.
“Soybean output from the South American country is estimated to be approximately 4% higher at 163.5 million metric tons compared to the prior season due to gains in acreage and yields, resulting in a lower soybean price.
“Elsewhere, the favourable weather conditions in Brazil have helped farmers in the country maintain a good harvest pace, boosting the production of both corn and wheat. In fact, per the USDA, Brazil’s corn crop production is expected to have risen around 14% Year-over-Year (YoY) for the month of July.”